Taking advantage of the successful DeFi projects and avoiding their shortcomings, Berachain was born.

Author: dt, DODOResearch

Berachain, also known as Bear Chain, has sparked discussions in the crypto community with the recent launch of its public testnet "Artio". The highly cult-like community has attracted attention from Degen enthusiasts since its launch at the end of 2021. The announcement of a substantial $42 million financing led by Polychain and OKX on April 20, 2023, has further drawn attention to this unique public chain project within the industry. With the public test of the testnet, the mainnet is expected to be launched in the near future.

This week, Dr. DODO will take everyone to understand the team background, public chain mechanism, and the noteworthy ecological projects of this upcoming new public chain.

Team Background

On April 20, 2023, Berachain disclosed their $42.069 million Series A financing, led by Polychain Capital, with participation from Hack VC and OKX Ventures. From the amount and date of this financing, it is evident that the Bera team has a cult-like nature. The four anonymous founders (Smokey the Bera, Papa Bear, Homme Bera, and Dev Bear) claim to be native crypto Degen enthusiasts. The name "Bera" is intentionally misspelled as a tribute to one of the most famous single words in the crypto community, "HODL".

When discussing the team background, it is necessary to mention their relationship with Olympus DAO. According to Berachain co-founder Smokey, they are a group of early investors in OHM from the Olympus DAO community. Initially, this was just an NFT project among community members - Bong Bears, paying homage to OHM's Ponzi mechanism, creating the first rebase NFT collection, and spawning several new collections - Boo Bears, Baby Bears, Band Bears, and Bit Bears.

Following the collapse of the cryptocurrency market, this group of DeFi enthusiasts, inspired by concepts such as Olympus DAO's Protocol Owned Liquidity and Terra's native stablecoin, decided to design their own L1 public chain, drawing on the advantages of these previously successful DeFi projects and avoiding their shortcomings. This gave birth to Berachain.

Source: https://opensea.io/collection/bongbears

Public Chain Mechanism

Berachain is a public chain that adopts the Proof of Liquidity mechanism and is built on Polaris EVM, running on the Cosmos SDK-based EVM.

As mentioned earlier, the Berachain team highly appreciates the Olympus DAO Protocol Owned Liquidity mechanism, which led to the innovative Proof of Liquidity mechanism in Berachain. According to Smokey, after experiencing many DeFi projects, they realized that liquidity is the most important factor for a project's success. Therefore, the team's first consideration was how to bring as much liquidity from blue-chip tokens such as BTC and ETH into Berachain as possible.

In the liquidity proof mechanism, users must provide their blue-chip tokens, such as BTC and ETH, to the BEX (Berachain's native DEX) to form liquidity LP in exchange for the protocol governance token $BGT. The $BGT token is responsible for the on-chain node verification mechanism and has voting governance functions (e.g., deciding on LP pool token reward distribution).

Source: twitter

Next, the three-token model of Berachain is introduced. Due to the design of the non-transferable $BGT token, users' Gas Tokens on the chain will be obtained through a 1:1 burn of $BGT, resulting in $BERA. Drawing inspiration from Terra's native stablecoin design, users can over-collateralize $BGT through the Honey Dapp to mint the native stablecoin $Honey.

• $BGT: Liquidity collateral proof token, used for on-chain verification and governance.

• $Bera: Gas Token obtained through a 1:1 burn of $BGT.

• $Honey: Native over-collateralized stablecoin.

In addition to referencing Olympus DAO and Terra, Berachain also draws on the concept of Canto's public DeFi infrastructure, which will introduce native DEX, native lending, and native on-chain perpetual contract platforms. The income generated by these native protocol on-chain protocols will be distributed to $BGT holders. Even its native DEX draws inspiration from the Solidly ve33 voting bribery mechanism, where node validators will be able to decide on the token incentive allocation for the native DEX LP pool through voting and receive bribery rewards.

This combination is expected to create a flywheel effect for Berachain, attracting more users to provide liquidity to obtain the protocol token $BGT.

Source: twitter

Ecological Projects

the honey jar

When discussing the ecosystem, it is essential to mention the honey jar (THJ). THJ positions itself as the entry point for the Berachain ecosystem and holds a significant influence in the community. It is responsible for educating users about Berachain and facilitating the incubation of ecological projects and matching between various protocols. THJ can be seen as the BD department of Berachain. Currently, THJ has launched Honey Comb NFT, but its specific function has not been confirmed. In addition, it is worth paying attention to the projects mentioned on THJ's Chinese Twitter and the Twitter account of founder Jani.

Beradrome

Another project to introduce is Beradrome, a ve33 DEX on Berachain that will focus on the Restaking liquidity market. The team launched its Tour de Berance NFT series a year ago and conducted multiple testnet tests. The NFT explicitly states that it will receive governance token $Bero airdrops based on rarity when the mainnet is launched.

Sudoswap

Sudoswap is an NFT liquidity market currently deployed on the mainnet. Its focus on liquidity innovation aligns with the central idea of Berachain. It has announced its intention to deploy the protocol after the launch of the Berachain mainnet. Once Berachain is officially launched, it is expected to bridge many NFTs on the mainnet to Bear Chain and provide incentives. Sudo is one of the first NFT markets to announce its involvement in Berachain.

Redacted Cartel

Redacted Cartel, incubated by the New Order team, is a DeFi yield protocol with multiple sub-products covering market trading bribery and LSD liquidity staking. It had previously announced the deployment of a new project on Berachain, but there is currently no further information available. With Berachain's built-in voting bribery mechanism, it can be expected that Redacted, a DeFi market yield ecological project of this type, will have the opportunity to shine on Bear Chain.

Algebra

Algebra is a backend product for outsourced trading functionality, primarily selling DEX backend contracts to any project interested in creating a DEX without having to rewrite the contracts themselves. Its product, Algebra Integral V4, is already being tested on the Berachain testnet. V4 will have hooks/plugins functionality and welcomes collaboration with any projects interested in deploying a DEX on Berachain, as confirmed by Bera co-founder Smokey.

The above five projects mainly introduce investment targets and actual products that are already available before the mainnet of Bear Chain is launched. After the mainnet is launched, more protocols will be deployed, so everyone should pay attention.

Author's Opinion

Compared to the traditional PoS mechanism, the author believes that the PoL mechanism is superior in terms of liquidity and security. The PoL mechanism introduced by Bear Chain not only creates a flywheel effect to increase TVL but also releases a lot of liquidity that was originally in PoS native tokens. By restricting LP methods, it ensures that only blue-chip tokens can obtain $BGT and protects security.

Of course, technology is just one of the reasons why Bear Chain is so popular. More importantly, it is the community's cult and meme attributes. The community is a crucial factor in the blockchain world. Projects that value the community will be able to gain a large number of loyal fans who voluntarily advertise for them. This can invisibly give the project more support and enable it to go further in the cryptocurrency world, where new projects are constantly being hyped up.

Overall, the author is very optimistic about Bear Chain's development in 2024. The team is very good at hyping expectations and designing the Pareto model. The overall architecture of the public chain is also different from other mainstream L2 public chains. Currently, both the NFTs from the Bera team and the NFTs/tokens from its ecological projects have brought users a lot of wealth effects. After the mainnet is launched, there will be many new projects to participate in. In addition, the Berachain testnet has also launched test tasks, so if you have free time, you might as well participate.

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