Written by: Biteye core contributor LouisWang
Edited by: Biteye core contributor Crush
In today's blockchain world, Berachain may be the most 'anti-traditional' project.
The founder Smoky wears a bear head costume every time he appears in public;
The project name 'Bera' is a tribute to the famous misspelling of 'hodl' in the cryptocurrency world;
While other projects are talking about ZK and new programming languages, they chose to build an EVM-compatible Layer1 public chain based on Cosmos technology;
Amidst the trend of transitioning from POW to POS, they proposed a brand new POL (Proof of Liquidity) mechanism.
These seemingly nonsensical choices contain profound reflections on the current pain points of public chains.
01 From NFT to Public Chain: A Unique Evolution Story
The story of Berachain begins with an NFT project called 'Bong Bears'. This seemingly random NFT series employs a Rebase mechanism similar to OHM: users holding the first generation of Bong Bears can receive airdrop rights for subsequent series.
This simple design has attracted a large number of users to hold long-term, subsequently launching series such as Bond Bears, Boo Bears, Baby Bears, Band Bears, and Bit Bears.
How did such an NFT project ultimately evolve into a top-tier public chain project with over a hundred million in institutional investment and much attention? What sets it apart?
02 The Dilemma of Traditional Public Chains and the Innovative Solutions of POL
Traditional public chains face a fundamental problem: a large amount of value is locked at the infrastructure level, while the builders who truly create value struggle to receive reasonable compensation. Verification nodes and token holders earn substantial rewards through staking, but their contributions are limited to maintaining network security.
Taking some public chains as examples, their FDV reaches as high as 1 to 10 billion USD, but the actual TVL is less than 100 million USD, yet they have to pay more than 10% annualized returns to maintain security. This mechanism has led to the emergence of 'ghost chains' — high on-chain security but almost no actual applications and activities.
Proof of Liquidity (POL) is a brand new consensus mechanism proposed by Berachain. Unlike traditional PoS networks that earn rewards through staking tokens, POL requires users to provide liquidity to specific liquidity pools to earn rewards. In other words, if you want to earn profits in this network, you need to actively participate in ecosystem construction, rather than simply locking your tokens.
To support this mechanism, Berachain has designed a sophisticated three-token system: BGT as a non-transferable governance token that can be converted 1:1 to BERA; BERA is used to pay gas fees and for market transactions;
HONEY is a stablecoin backed by over-collateralization of quality assets. These three tokens work together to build a self-sustaining economic model.
Under the POL mechanism, users earn BGT rewards by providing liquidity, which can be delegated to verification nodes for network verification. Verification nodes not only participate in block generation but can also vote to decide the BGT reward distribution ratio for different liquidity pools.
This creates a unique economic model: verification nodes need to carefully consider which projects are most valuable, as their votes directly affect the development direction of the ecosystem.
This mechanism design achieves three key breakthroughs:
First, it directs the network value directly towards the builders and participants of the ecosystem. Each protocol can autonomously design the way users acquire BGT and create incentive mechanisms to promote ecosystem development. This direct value distribution model ensures that the behavior of creating value can be rewarded in a timely and adequate manner.
Secondly, it establishes a symbiotic relationship between verification nodes and project parties. The rewards of verification nodes are closely tied to the success of the project, which incentivizes them to actively support the development of the ecosystem, rather than just focusing on their own staking rewards.
Finally, it creates a positive incentive cycle. Increased user participation leads to stronger projects, and strong projects attract more users and liquidity, forming a virtuous cycle. This mechanism effectively prevents the emergence of 'ghost chains' because network value is directly linked to the actual activities and utility of the ecosystem.
In terms of technical route, Berachain chose to build on Polaris EVM, a decision that brings two major advantages. First, full compatibility with EVM lowers the entry barrier for Ethereum developers; second, as part of the Cosmos ecosystem, Berachain gains strong cross-chain capabilities through the IBC protocol. This technical choice provides a solid foundation for the future expansion of the ecosystem.
03 Community Culture: From Meme to Strong Consensus
The community culture construction of Berachain represents a brand new community operation idea in the cryptocurrency world. While many new public chains neglect community culture building, Berachain successfully constructs a community ecosystem with a strong sense of identity and high activity.
This unique community culture is first established on the understanding of Ponzi culture. The Berachain team, initiated by several senior DeFi project veterans, does not shy away from the Ponzi label but rather faces it with an open and humorous attitude. This attitude has garnered more trust and recognition for the project in the community, although outsiders often compare Berachain to the next Luna, this comparison overlooks the essential differences in mechanism design between the two.
Secondly, it is built on a deep-rooted Meme culture. From the project name 'Bera' to the founder Smokey wearing a bear head costume at formal events, and to the unique phrases popular in the community such as 'Henlo' and 'Ooga Booga', it exhibits a highly internet-savvy culture that perfectly aligns with the current crypto aesthetics, naturally cultivating a strong sense of community identity.
Finally, don't forget that Berachain originated from an NFT project. Starting from the initial Bong Bears, NFTs have become more than just digital assets; they are carriers of community culture. Various projects in the ecosystem spontaneously associate their NFT series with the Bear theme, forming a unified cultural symbol. This cultural identity is directly reflected in the data: the secondary market listing rate for major NFT series is below 2%. Compared to pure tokens, these NFTs carry more cultural attributes and a sense of community belonging.
04 Ecosystem Projects
Berachain adopts a bold yet practical strategy in ecosystem construction: the official team personally develops the core infrastructure.
The founding team recognized that allowing multiple functionally similar DEXs, lending, and derivatives platforms to compete could lead to meaningless internal competition and vicious competition.
Therefore, they decided to keep the three most important infrastructures in the hands of the officials. More importantly, DEXs, lending, and perpetual contract platforms are often the main sources of income in blockchain ecosystems.
By officially operating these services, Berachain can better return profits to BGT holders, providing continuous value support for governance tokens, thus promoting the healthy development of the entire ecosystem.
Currently, Berachain has attracted nearly a hundred projects, among which DeFi projects dominate, fully reflecting Berachain's emphasis on liquidity. Fifteen native projects have received support from the bera incubator or VC investment, raising a total of 24.4 million USD in public funding.
Shogun: Cross-chain trading infrastructure
Shogun is also selected for the Build-A-Bera program and Binance's S6 incubation project, aiming to solve the core pain points of cross-chain transactions.
Currently, cross-chain transactions face multiple challenges: users need to manage multiple wallets, handle gas fees for different chains, select suitable cross-chain bridges, and also need to understand various ecosystems in depth. These complexities not only increase operational difficulty but can also lead to inefficient transactions or fund losses.
Shogun solves these issues through an innovative intent execution system. The system introduces a 'solver' mechanism to maximize TEV (Trader Extractable Value) by optimizing trading paths.
Specifically, when traders set their trading intentions, solvers look for the optimal execution path in a cross-chain environment: for buy orders, they strive to complete purchases at prices below the limit price; for sell orders, they seek selling opportunities above the limit price. This mechanism transforms traditional MEV into user benefits while providing a trading experience close to that of centralized exchanges.
Infrared Finance: Innovative Liquidity Staking
Infrared Finance is based on Berachain's POL mechanism, redesigning the liquidity staking model on a three-token architecture. The project provides BGT holders with value maximization solutions through the POL treasury and iBGT liquidity staking derivatives.
The project has received funding support, including from Binance Labs.
Kodiak: Efficient liquidity management
Kodiak positions itself as the native liquidity hub of Berachain. The project innovatively combines concentrated liquidity and automated liquidity management technologies, aiming to provide the highest quality liquidity services to support the efficient operation of the entire ecosystem. The project received $2 million in seed round investment.
Goldilocks: Innovative Integration of DeFi and NFTfi
Goldilocks completed a $1.5 million financing round led by Hack VC and Shima Capital, focusing on building DeFi and NFTfi infrastructure. The project includes two core components:
Goldiswap: A trading platform based on custom AMM, utilizing a dual pool design of FSL (Supporting Liquidity Pool) and PSL (Price Supporting Liquidity Pool).
Goldilend: A lending platform built around the Bong Bears NFT series. Its innovation lies in that the minimum valuation of NFTs is determined by governance votes from LOCKS token holders, freeing it from reliance on oracles and bringing a new value discovery mechanism to NFT finance.
Honeypot Finance: Innovative Trading and Issuance Mechanism
Honeypot Finance has completed multiple rounds of financing totaling 1.3 million USD, building two core products:
DreamPad: A token launchpad using the FTO (Fair Token Offering) model. Its feature is that the project party has zero reservations, providing 100% of tokens to the market, ensuring maximum fairness.
HenloDEX: A decentralized exchange using the Batch-A2MM mechanism, effectively preventing sandwich attacks through innovative trading mechanisms while providing limit trading functions, optimizing user trading experience and reducing slippage.
More testnet projects can be queried through BeraLand.
05 Participation and Interaction
Berachain is currently running the second version of the testnet Bartio. The most basic interaction participation can refer to the Dapps interface on the official website, which, as mentioned earlier, are all DeFi cornerstones developed by the Bera team.
To participate, you first need to claim test coins from https://bartio.faucet.berachain.com/, which has a small barrier to entry, requiring the claiming address to have a balance of at least 0.001 ETH on the mainnet. Compared to the earlier testnet scenario of 'water being hard to obtain', this round of testnet token claiming is much smoother.
After claiming testnet tokens, you can swap on BEX, exchanging the $BERA received for other tokens, providing liquidity. Note that you need to retain some $BERA for future gas consumption during the exchange.
It is recommended to convert $BERA into stablecoins Dai or STGUSDC, and use them in HONEY to mint the stablecoin $HONEY.
After obtaining $HONEY, stake it in BERP to receive bHONEY, which can then be staked at Station to the corresponding Vault to earn $BGT, or it can also be used directly as trading margin for derivatives trading in BERP.
For more project interactions, Vaults on BGT Station are a great reference. Different Vaults correspond to different interaction projects, and you can judge project popularity based on the BGT Capture index, interact to obtain corresponding tokens, and then deposit them into Station for earnings.
06 Summary
Berachain seems to me to be a very crypto-native public chain, deeply understanding two core elements of the crypto world: liquidity and community.
The team deeply understands that the essence of crypto is liquidity. The project directly faces and embraces the Ponzi attribute of stepping on the left foot while stepping on the right foot, releasing tremendous energy in bull markets through a carefully designed three-token and POL mechanism. At the same time, the team is well-versed in community building.
While maintaining serious public chain development, it can also gather users and liquidity through meme culture. A public chain with both a user base and sufficient liquidity, the mainnet launch of Berachain is highly anticipated, as it may bring a new wave of innovation to DeFi.