Berachain is like a super fun playground where kids (developers) can build awesome sandcastles (applications), just like they do at the big playground called Ethereum. But at Berachain’s playground, kids can get extra rewards (special prizes) by bringing more sand (liquidity) to the playground, which helps everyone build even bigger and cooler sandcastles!
How does the playground work?
1. Bring More Sand, Get More Prizes: Instead of just having a few kids in charge, everyone who brings extra sand (liquidity) gets rewarded. This keeps the playground full of sand, so everyone can keep playing and building.
2. Proof-of-Liquidity System: The playground has a clever system that makes sure there’s always enough sand for everyone. The kids who bring sand get special tokens (liquidity rewards) that they can trade or use to earn more prizes.
3. Working Like Ethereum: This playground works a lot like the big playground (Ethereum), so kids who know Ethereum will feel right at home here. It’s fast and can handle lots of kids (users) playing at once without things getting too crowded.
Proof-of-Liquidity
Imagine the playground still works as described before, where kids bring sand (liquidity) to build sandcastles and get rewards. Now, let’s zoom in on how this sand is used and how the rewards system works.
1. Kids Staking Tokens (Sand): Some kids bring their gas tokens (represented by sand) and hand them over to a kid in charge (node or validator). The more sand a kid brings, the more weight (importance) they have in the playground activities.
2. Validator Node (Kid in Charge): The kid in charge (validator node) collects the sand from the other kids and makes sure it’s being used properly in the playground. This kid is responsible for keeping track of everything that’s going on.
3. Liquidity Providers (More Kids with Sand): Other kids come to the playground and bring even more sand (liquidity). These kids are essential because the more sand they bring, the better the playground becomes for everyone. They give this sand to the Rewards Vault (a special storage).
4. Rewards Vault (The Sand Storage): This is where all the sand brought by kids (liquidity providers) is stored and managed. It’s like a giant sand vault. The sand here helps keep the playground active and running.
5. Delegators (Decision-Making Kids): Some kids have special badges (governance tokens), which allow them to influence how the playground is run. These kids don’t need to bring sand themselves but can delegate their badge powers to the kid in charge (validator node), giving them more weight (influence) in deciding rewards.
6. Rewards Distribution: The Rewards Vault is always looking to reward the kids who bring more sand and help out. The more sand (liquidity) kids contribute, the more prizes (governance token rewards) they receive. It’s like the playground saying, “Thanks for keeping us full of sand—here are some cool prizes to use in the playground!”
A Unique System:
In Berachain, there are special kinds of tokens that help you play in the playground :
$BERA: This is like your entry ticket to the playground, which you need to pay for games and activities (gas fees).
$BGT: This is like a special badge you earn by playing a lot and helping others (governance token). It gives you more say in how the playground is run.
$HONEY: This is the prize you get for participating in games and activities (a stablecoin used in decentralized finance activities).
▶️ Credit - Suhail kakkar / Berachain Blog
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