Discover Berachain, a high-performance EVM-compatible blockchain built on Proof-of-Liquidity consensus. Learn about its unique features, ecosystem, tokenomics, and how it aims to revolutionize the blockchain space.

What is Berachain?

Berachain is a high-performance blockchain that is compatible with the Ethereum Virtual Machine (EVM) and operates on a unique Proof-of-Liquidity consensus mechanism. This innovative consensus method aims to align network incentives, fostering a robust synergy between Berachain validators and the broader ecosystem of projects. Berachain’s technology is built on Polaris, a high-performance framework for creating EVM-compatible chains on the CometBFT consensus engine.

By leveraging the Polaris framework and the CometBFT consensus engine, Berachain supports Ethereum’s smart contract capabilities while adding new functionalities for decentralized applications. Known as an “EVM-equivalent-plus” blockchain, Berachain combines EVM compatibility with enhanced features, making it a strong contender in the blockchain space. Its design, supported by the Cosmos-SDK, offers modularity and versatility, catering to developers and users who seek advanced and efficient blockchain solutions.

The Berachain core principles

Defragmenting liquidity

Simple DeFi legos (AMM, Perps, Lend) and pools are integrated into the chain and powered by validators.

Turbocharging Applications

Validators channel network emissions towards decentralized dApps built on Berachain.

Highly Accessible

An interoperable and modular VM built at the intersection of EVM and the Cosmos ecosystem.

The mechanism of Berachain

Proof of Liquidity (PoL) is a consensus validation method created by Berachain to prevent Sybil attacks using secure consensus algorithms for calculating rewards for validators and stakers. PoL ensures the system’s liquidity and creates a trustworthy environment for users.

Specifically, the PoL mechanism operates as follows:

• Users stake tokens like wETH, wstETH, and wBTC into the consensus vault to delegate to validators. Unlike other blockchains that typically use native coins, Berachain allows the use of tokens from different chains.
• Each staked token has its own weight and earns BERA as a corresponding reward.
• This multi-token staking mechanism makes it difficult for individuals to create multiple fake accounts (Sybil attacks) and participate in the staking process, while also ensuring network decentralization. However, at the time of writing, the project has not yet released a Whitepaper to confirm the feasibility of PoL.

Berachain Ecosystem

Currently, Berachain features a native decentralized exchange (DEX) called BEX. BEX serves as a platform for swapping new tokens and providing liquidity for the entire chain. Additionally, BEX offers features such as:

• Buying and selling tokens (exchange)
• Providing liquidity for BEX
• Earning BGT rewards for liquidity provision
• Analyzing various data related to token performance and different liquidity pools

The Berachain ecosystem is gradually being completed with components such as automated market makers (AMM), perpetual contracts (Perps), lending, and more. However, it may take some time for these components to become fully compatible and functional. By collaborating with high-quality projects like Pendle and Celestia, and integrating them into its ecosystem, Berachain aims to become a formidable competitor in the race for Layer 1 Modular Blockchains in the future.

Berachain Tokenomics

Berachain is built with three main types of tokens:

• BERA: Used for transaction fees, with all tokens used to pay fees being burned. BERA has an inflation rate of 10% per year.
• HONEY: The platform’s stablecoin, backed by assets staked on Berachain.
• BGT: The governance token of the network, identified as an NFT (ERC-721 token) and non-transferable. BGT holders have the right to vote on Berachain’s issues and receive additional platform transaction fees as rewards.

The Berachain Token Mechainism

Users stake various tokens into “consensus” vaults to receive BERA tokens. They then stake BERA tokens to obtain BGT tokens – the governance token of Berachain. BGT holders can participate in platform governance, enjoy preferential borrowing rates for the stablecoin HONEY, and receive additional rewards from the platform’s transaction fees.

Users can also use the staked tokens as collateral to borrow HONEY for spot trading, derivatives, etc., with platforms that build vAMM mechanisms on Berachain. Additionally, staked tokens can be paired with HONEY to provide liquidity, enhancing the ecosystem’s liquidity, protecting the network from Sybil attacks, and optimizing user profits.

Investors

Berachain successfully raised $42 million in its Series A funding round on April 20th, 2023, with a valuation of up to $420 million. The round was led by Polychain Capital, with participation from Hack VC, dao5, Tribe Capital, Shima Capital, CitizenX, and Robot Ventures. Several angel investors also participated, including DCF GOD, Brian Tubergen, Joey Santoro, and others.

Conclusion

Berachain is a promising Layer 1 blockchain with the potential to create a breakthrough in the crypto market. With its PoL technology and modular blockchain approach, Berachain aims to set new trends and become a leading player in the blockchain space.

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