Berachain: Analyzing Its Unique Mechanism Design and Ecological Development

Berachain is an EVM-compatible L1 public chain focused on DeFi, built on the Cosmos SDK, and employs a Proof of Liquidity ( PoL ) consensus mechanism. The project originated from the Bong Bears NFT series launched in August 2021, which later led to the emergence of several related NFT collections.

The Berachain team believes that liquidity is the foundation of DeFi, which is why they designed this public chain to address liquidity issues. Internal testing will begin in November 2023, and the public testnet "Artio" will go live in January 2024. It is reported that over 30 native protocols are in development, and several well-known projects also plan to deploy.

In April 2023, Berachain secured $42 million in funding led by Polychain, with a valuation of $420 million. The project was founded by an anonymous team, with core members experienced in the cryptocurrency field.

Mechanism Design

Berachain is built on Polaris EVM, featuring Ethereum developer friendliness and strong cross-chain interoperability.

The PoL mechanism incentivizes users to provide liquidity to the native DEX BEX in exchange for governance tokens BGT, which can then be delegated to validators to participate in consensus. This mechanism has the following advantages over PoS:

1. Increase liquidity and security
2. Achieve a more decentralized inflation distribution
3. Coordinate asset issuance agreements with validator relationships

The three-token model includes:

• BGT: Governance token, obtained only by providing LP
• BERA: Gas token, obtained through BGT burning or verification rewards.
• HONEY: Native stablecoin, protocol revenue distribution medium

The model builds systematic liquidity, supporting diversified assets to participate in staking.

Important Ecological Projects

1. the honey jar: ecological entry point, responsible for user education and project incubation

2. Beradrome: DEX and Restaking Liquidity Market

3. Beradoge: A popular Meme project with multiple NFT series.

4. Sudoswap: Full-chain NFT AMM liquidity market

5. Beramonium: Blockchain Game Project

6. Redacted Cartel: DeFi Yield Protocol

Berachain's unique design is expected to lead DeFi innovation, creating an ecosystem with high liquidity and capital efficiency. With the growth of users and an increase in transaction fee revenue, a positive growth flywheel is anticipated. However, the project's future development still requires ongoing attention.