Author: Yond, Bear's Home

Introduction

Fallow morning!

Although BearChain has been developed for more than two years, there is still a lack of comprehensive interpretation of BearChain in the Chinese community. In addition to a weak voice in the Degen and LuMao circles, most users still think of BearChain as "memechain", "NFT is expensive", "Ponzi", "the next LUNA" and other inaccurate or even completely wrong concepts.

Why do I think Berachain is the most anticipated public chain in the second half of 2024, and it may even become an independent narrative in the crypto market? I will help Chinese users reshape their understanding of Berachain from the aspects of Berachain's history, market demand, economic model design, community culture, etc.

The dilemma of emerging public chains: liquidity and chip allocation

Since the first half of 2023, new public chains and Layer 2 have sprung up like mushrooms after rain. Due to the sluggish external economic situation and the lack of liquidity injection in the crypto market, the competition among public chains has gradually evolved into a competition for the existing liquidity in the market. In order to cold start and attract liquidity, new public chains and Layer 2 have begun to launch centralized points operation plans, attracting user deposits by overdrawing airdrop/coin issuance expectations, and providing short-term and disloyal TVL figures for ecological projects.

2024 is already halfway through, let’s review some of the new public chains and Layer 2 that have ended their points programs and completed token issuance 👇🏻

Merlin Chain - TVL high point 534.4m, current 214.07m, a drop of 60%;

Blast - TVL high point 2.3b, current 1.33b, down 44.2%;

Mode - TVL high point 587.12m, current 456.22m, down 22.3%;

Data source: https://defillama.com/

When various types of points have completed their missions, can the new public chain and Layer 2 continue to retain the TVL from the points and reverse their fate of becoming a "ghost town"? Since points have been proven by the market to be an unsustainable and even harmful way for market participants, can the builders of the public chain explore a more healthy way of allocating chips for the crypto market, so that liquidity can be retained in a more organic way?

Originated from DeFi, but not limited to DeFi

The story of BearChain began with the DeFi 2.0 craze at the end of 2021. DeFi 2.0 protocols represented by Olympus DAO created super-high APYs with complex Ponzi schemes, which reignited crypto users' enthusiasm for research and participation in on-chain DeFi projects in a market that had experienced a sharp drop at the time. For a time, various discussions about (3,3) frequently appeared on crypto social media. *The term (3,3) comes from the Nash equilibrium in game theory, which represents the possible optimal solution in a two-party game. The opposite (-3,-3) represents the worst solution.*

BearChain was not a public chain at the beginning, but a series of NFT projects with the funny image of "smoking bears". Its gameplay refers to the Rebase mechanism in OHM. Holding the first generation of Bong Bears projects can get airdrops of subsequent series, thus encouraging long-term holding. There are five subsequent series, namely Bond Bears, Boo Bears, Baby Bears, Band Bears, and Bit Bears.

After BearChain announced the launch of its public chain, the value of previously issued NFTs has also skyrocketed. The current floor price of the lowest-priced Bit Bears series is as high as 3.8 ETH.

Proof of Liquidity: Coexistence in Gaming

Blockchain is the industry closest to asset issuance, with prominent financial attributes. Most of the innovations in blockchain serve to create a more efficient way of issuing assets, or in layman's terms, "making a plate." So, can game theory and Ponzi schemes, which are flexibly used in DeFi to improve capital efficiency, also serve the ecology of other tracks, or exist as the underlying design of public chains?

BearChain’s Proof of Liquidity gives a positive answer.

The outside world's basic perception that BearChain is a "Ponzi scheme" mostly comes from BearChain's unique liquidity proof mechanism.

There are various consensus mechanisms in the blockchain world, including the Proof of Work (PoW) represented by the Bitcoin network and the Proof of Stake (PoS) represented by the Ethereum network. Nodes comply with such consensus mechanisms, provide block verification for the entire network, maintain network security, and obtain node rewards.

The three basic currency units of BearChain are:

$BGT: Berachain Governance Token, cannot be transferred or traded, can be converted into BERA at a 1:1 ratio

$BERA: Public chain token, can be used for Gas consumption and secondary market transactions

$HONEY: An over-collateralized stablecoin minted with blue chip assets as collateral

For a basic introduction to proof of liquidity, please refer to the previous article 🐻📝 Bear Class 01: What is proof of liquidity?

Through liquidity proof, BearChain injects liquidity into the underlying public chain, and encourages more users and ecological protocols to participate in governance in the form of BGT flywheel, unlocking more long-term benefits. While avoiding the single point failure risk of a single dAPP owning most of the public chain's liquidity (this situation often occurs in some "ghost chains"), it stimulates the enthusiasm of the entire chain ecosystem to participate in governance to obtain dividends and retain TVL.

The one-way conversion mechanism between BGT and BERA (Note: BGT can be converted into BERA at a 1:1 ratio, but BERA cannot be converted into BGT) separates the governance value and market price of public chain tokens, encourages BGT to remain in the ecosystem to play its governance role, and provides holders with more long-term benefits ($BGT block value capture, governance benefits, bribes obtained by delegating governance rights, etc.), while reducing the selling pressure of BERA.

Under the liquidity proof model, the three parties in the public chain game (nodes, ecological projects, and users) help and benefit each other, forming a positive flywheel effect:

➡️Nodes: Have the authority to participate in governance and guide the emission of BGT. Nodes have enough motivation to attract BGT delegations from retail investors and ecological projects, keep BGT on the chain and participate in governance to obtain additional income, rather than simply mining and selling BERA.

➡️Ecological projects: Without affecting their own business models and revenues, convert cash income into public chain liquidity to obtain additional BGT income.

➡️Users: can enjoy deeper liquidity, less transaction friction, more liquidity rewards, and maximize the economic benefits of the BGT they hold by delegating to nodes.

Compared to the simple and crude points model that overdraws the long-term life of the public chain with the expectation of short-term airdrops, the (3,3,3) flywheel is more organic, encouraging long-termism and TVL retention. The public chain token chips are distributed in the mode of governance war, achieving maximum fairness among all game parties in the public chain while complying with the rules of the game.

Community culture and cohesion

BearChain’s popularity on crypto social media is largely due to its funny community culture \Bear Power/

If you have come into contact with BearChain or its ecosystem before, in addition to the 🐻⛓️ emoji suffixed to the Twitter username, you must have heard of BearChain’s “jargon” more or less: Henlo, BM, Ooga Booga

Henlo: A cuter way to say hello than Hello, similar to the Chinese "Nihao"

BM：Bera Morning - Corresponds to GM Good Morning

Ooga Booga: Imitating the roar of a bear is the "code" for greeting each other in the BearChain ecosystem

The word "community" or "community" in English appears frequently in the context of encryption, but most users do not have a comprehensive understanding of the word, and only narrowly understand it as various group chats, Telegram, and Discord channels.

Due to language and cultural differences, many users are not familiar with BearChain's "jargon culture", and think it is obscure and difficult to understand. Some even associate BearChain with the memecoin project that conveys a similar spirit, mistakenly believing that BearChain is a "memechain".

"Community" is formed based on the common beliefs of different individuals. Different individuals may resonate with the same cultural symbols and form a small united tribe with real power with enough cohesion. "Community" is collectivism based on individualism.

We don’t need to demonize the abstract culture of Xionglian. The “42069” Western meme culture represented by marijuana, politics, and hell jokes is essentially no different from the abstract culture that appears in Chinese social media (for example: e-sports memes, anime memes, and Sun Bar memes), and they all belong to the network subculture branch of contemporary popular culture.

The abstract culture popular in the BearChain ecosystem is in line with the values ​​of young people in Europe and the United States (who are also the main force of encryption) who surf the Internet for fun, and can also inspire their sense of identity. In the customer acquisition path that many new public chains and Layer 2 ignore, BearChain has also established its own advantages with its super-symbolic image.

Conclusion: Gimmick or real skill?

We have not yet learned the date of BearChain's mainnet launch, and there has been a joke circulating within the BearChain community: "BearChain will never be launched on the mainnet." As far as current social data is concerned, BearChain, which is still in the testnet stage, has accumulated a large audience and potential user base. The memes and discussions about BearChain's mechanism are also widely circulated on crypto Twitter, which positively shows that its market and brand effects have received enough market attention.

As Binance Labs has successively announced its support for BearChain ecological protocols such as Shogun and Infrared, it seems that we are not far from the launch date of the BearChain mainnet.

It should be noted that there has been controversy in the Chinese community regarding the testnet interaction and airdrops. Some crypto KOLs criticized BearChain for indefinitely delaying the mainnet launch, PUA users, and occasional network congestion, which also brought users a less friendly interaction experience.

In addition to analyzing the advantages of BearChain, we also need to look rationally at the opposing voices in the market.