Berachain has sparked discussions again in the crypto community recently after launching its public testnet “Artio”. Its extremely cult-like community has attracted attention from degens in the circle since its launch in late 2021. After announcing a huge $42M funding round led by Polychain and participated by OKX Ventures on April 20, 2023, it drew even more attention to this very unique public chain project. With the testnet now open to public testing, its mainnet launch seems not too far away.

This week Dr. DODO will walk you through Berachain’s background, chain mechanisms and some noteworthy projects in its ecosystem, introducing this soon-to-launch new public chain from these three perspectives.

Team Background

On April 20, 2023, Berachain announced its $42.069M Series A funding round, led by Polychain Capital and joined by Hack VC and OKX Ventures. Judging by the funding amount and date, you can easily tell the cult attributes of the Bera team. Its four anonymous co-founders (Smokey the Bera, Papa Bear, Homme Bera and Dev Bear) claim to be crypto natives and degens. The name Bera itself is a deliberate misspelling of “bear” paying homage to one of crypto’s most iconic words “HODL”.

<When it comes to their background, we have to mention the team’s relationship with OlympusDAO. According to Berachain co-founder Smokey, they are a group of early OHM investors who got to know each other in the OlympusDAO community. It started as an NFT project called Bong Bears among community members to pay tribute to OHM’s ponzi mechanism, creating the first rebase NFT collection which later spawned more collections like Boo Bears, Baby Bears, Band Bears and Bit Bears.

As the crypto market crashed, this group of DeFi enthusiasts were inspired by concepts like OlympusDAO’s POL (Protocol Owned Liquidity) and Terra’s native stablecoins. They decided to design their own L1 chain incorporating the strengths of these once-successful DeFi projects while avoiding their weaknesses, birthing Berachain.

Chain Mechanisms

Berachain is a public chain built on Cosmos SDK and Polaris EVM, using a Proof of Liquidity mechanism.

As mentioned, the Berachain team highly regards OlympusDAO’s Protocol Owned Liquidity model and created its innovative Proof of Liquidity mechanism. According to Smokey, through their experience across DeFi projects, they realized liquidity is the most crucial factor in a project’s success. So they focused first on how to bring ample liquidity of bluechip tokens into Berachain.

Under Proof of Liquidity, users need to provide liquidity of bluechip tokens like BTC and ETH on BEX (Berachain’s native DEX) to earn governance token $BGT. $BGT tokens are responsible for chain validation and governance (e.g. deciding LP reward rates).

There is also a three-token model on Berachain. Due to $BGT's un-transferrable design, the gas token used by users is $BERA minted from burning $BGT 1:1. Also inspired by Terra’s native stablecoins, users can mint native stablecoin $Honey by staking $BGT on Honey Dapp.

• $BGT: Liquidity staking token for validation and governance.

• $Bera: Gas token minted from burning $BGT 1:1.

• $Honey: Native algorithmic stablecoin.

Inspired not just by OlympusDAO and Terra, Berachain also borrowed concepts of public DeFi infrastructure from Canto, launching native DEX, lending and perpetual contracts that distribute revenue to $BGT holders. Its native DEX even has a ve33 voting bribery mechanism like Solidly to let validators vote on LP reward rates and earn bribes.

This combination aims to create a flywheel effect, attracting more liquidity to earn $BGT.

Ecosystem Projects

the honey jar

When talking about its ecosystem, we have to mention the honey jar (THJ). THJ describes itself as the gateway into Berachain’s ecosystem. It has great influence in the community, responsible for educating users, incubating projects and connecting protocols. Think of it simply as Berachain’s BD department. THJ has launched an NFT collection Honey Comb without clear utilities now. Look out also for projects mentioned by THJ’s China Twitter and founder Jani.

Beradrome

Another project is Beradrome, a ve33 DEX on Berachain focused on restaking liquidity markets. The team released NFT collection Tour de Berance a year ago and done multiple testnet testing already. The NFT promises airdrops of the $Bero governance token upon mainnet launch at various tiers based on their rarity tier.

Sudoswap

Sudoswap is an NFT liquidity market stressing the same pain points of liquidity as Berachain, so announced early on plans to deploy after Berachain’s mainnet too. There are hopes its bridge for bluechip NFTs when live can bring major mainnet projects onto bear chain with incentives. It is one pioneering NFT market deploying on Berachain.

Redacted Cartel

Incubated by New Order, Redacted Cartel is a DeFi protocol encompassing trading bribery markets and LSD liquidity staking. It also announced plans for new deployments on Berachain but no specific details yet. With native bribery mechanisms, it is foreseeable that DeFi bribery fariming protocols like Redacted will thrive on bear chain.

Algebra

Algebra is a backend product selling DEX contracts. It saves others building from scratch by letting them easily spin up DEXes with its services. Its product Algebra Integral V4 is already live on Berachain testnet, with hooks/plugins in V4 and open doors to anyone interested to build DEXes, endorsed by Bera co-founder Smokey.

Above introduces some investable projects with live products before mainnet launches. Many more protocols will deploy upon mainnet, so stay tuned!

Author's Perspective

Compared to traditional PoS, I believe Berachain’s PoL mechanism improves liquidity and security. Besides the flywheel effect driving TVL, Berachain’s PoL also unlocks liquidity stuck in PoS tokens, while ensuring only bluechips receive $BGT rewards to safeguard security.

Of course tech is but one reason behind Berachain’s popularity. More crucial is the cult and meme attributes of its community. Community is pivotal for blockchain projects, those who value community can easily garner a loyal army that voluntarily markets for them. This shapes invaluable, sustainable momentum amidst the cutthroat crypto market.

I’m very bullish on Berachain in 2024. Its team is very capable of building hype and designing Ponzi-like models. Its overall architecture is also refreshing compared to generic L2 solutions. With strong wealth effects observed already from team NFTs and ecosystem projects’ NFTs/tokens, participation in new projects upon mainnet launch will be attractive. For now, check out campaigns on Berachain testnet to get a brief hands-on preview!