Discussion on the Characteristics of the Berachain Ecosystem and Overview of Core Projects Before Coin Issuance

Introduction

Berachain is a Layer 1 network characterized by its PoL( Proof of Liquidity) consensus mechanism, which aligns the interests of validators, liquidity providers, and the protocol. Currently, Berachain is conducting its second testnet "bArtio Testnet" to address the issues identified in the first testnet.

Many ecological protocols have already been deployed on the bArtio Testnet version. As of January 2nd, according to the Berachain official website, a total of 234 protocols are participating in the bArtio Testnet, and the cumulative number of wallets testing Berachain's PoL mechanism has exceeded 2.38 million. Although it is still in the testnet phase, these figures indicate a high level of market interest in Berachain and its ecosystem.

Starting from the end of 2024, Berachain founder Smokey The Bera announced the "Q5 launch of the mainnet" and recently introduced Boyco through a tweet, hinting that "Q5 will happen before April," indicating that the launch of the mainnet is imminent. This has also attracted both new and existing users to join the Berachain ecosystem.

However, to participate in the Berachain ecosystem, it is essential to understand their PoL mechanism. Before the mainnet launch, the various complex financial products introduced by protocols to gain an advantage in the PoL mechanism have actually created a significant entry barrier for new users.

This article aims to explore various areas of the Berachain ecosystem to effectively lower the barriers to user participation. We will discuss projects that have excelled in different fields and elaborate on how each protocol utilizes the PoL mechanism.

DEX

Berachain has a native DEX called BEX, which will be launched as BeraSwap when the mainnet goes live. BeraSwap will support smooth liquidity trading within the ecosystem and ensure the effective operation of the PoL mechanism. In light of the existence of BEX, other DEXs preparing to launch on Berachain are also preparing various more convenient and efficient services and strategies to effectively compete with BEX and attract users and liquidity.

Kodiak

Kodiak is a DEX that stands out from Berachain's incubation project "Build a Bera". In addition to supporting BEX's Uniswap v2-style feature ( that evenly distributes liquidity across the entire price range ), Kodiak also offers a CLAMM ( concentrated liquidity automated market maker ) feature similar to Uniswap v3, allowing liquidity providers to set and concentrate liquidity within a specific range.

Users can provide liquidity in a narrow range through the CLAMM pool to farm $BGT more effectively. Additionally, Kodiak offers an Island feature to help users automatically reset and balance the CLAMM range, reducing the hassle of managing liquidity supply positions. This feature utilizes BEX to rebalance liquidity, thus establishing a complementary rather than competitive relationship.

Moreover, due to the customizability of liquidity ranges, the tokens of CLAMM liquidity positions are often difficult to be used by other protocols. However, Kodiak standardizes users' CLAMM liquidity positions through the Island feature, allowing these LP tokens to be used in other protocols, facilitating more flexible and diverse ecological gameplay.

Before the mainnet launch, Kodiak has collaborated with many projects in the Berachain ecosystem, establishing its position as a core infrastructure. They also operate their own Berachain nodes as validation nodes, and as of January 3rd, have received the second highest BGT authorization in the bArtio Testnet.

Honeypot Finance

Honeypot Finance is a protocol that supports all aspects of the token lifecycle, from issuing to providing liquidity and effective trading, consisting of the following sub-protocols:

• Henlo DEX: A DEX specifically designed to protect users from MEV attacks, providing limit orders and Batch-A2MM functionality, allowing for the collection of user orders within a specific time frame and executing them at the same price.

• Dreampad: a Launchpad protocol that provides incubation and financing opportunities for projects preparing to launch on Berachain, while ensuring a fair token launch and distribution.

• Pot2Pump: A meme coin issuance platform that provides a safer environment for meme coin issuance and trading, featuring functions such as preventing bot sniping and refunding participating users if the 24-hour fundraising target is not met.

Similar to Kodiak, Honeypot Finance also plans to operate as a validator after the mainnet launch, providing its governance token $HPOT as a delegation reward to users who delegate $BGT.

In addition, Honeypot Finance utilizes the accumulated $BGT to release into the $HPOT liquidity pool, thereby enhancing the liquidity of $HPOT. The protocol also plans to enhance the token value by using node operation revenue to buy and burn $HPOT, while retaining the reward value paid to $BGT delegates, further consolidating the liquidity of $HPOT.

In addition to the aforementioned Kodiak and Honeypot Finance, there are other protocols advocating for efficient and convenient trading functions that are preparing for the Berachain mainnet, including BurrBear, which supports capital-efficient trading by aggregating more than three similarly priced underlying assets similar to Curve Finance (, the liquidity aggregator OogaBooga, and the cross-chain abstract trading protocol Shogun.

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Liquidity Staking

In a typical PoS network, network rewards are distributed to validators who hold a certain amount of tokens and operate nodes. Therefore, if the network itself does not have a native token authorization structure, general users who do not operate nodes will not be able to receive network rewards.

To address this issue, liquidity staking protocols distribute rewards by accepting the staking of native tokens and delegating node operations, allowing general users to participate in network staking. These protocols also issue LP tokens to stakers as proof of how many native tokens they hold, thereby increasing the liquidity of the ecosystem. Through these functions, liquidity staking protocols have also become a core infrastructure of PoS networks.

In contrast, although Berachain's node operation requires 69,420 $BERA, its structure allows liquidity providers to receive network rewards calculated in $BGT and liquidity provision interest when they deposit liquidity tokens obtained from the ecological protocol into Berachain. Therefore, apart from the different methods and sequences, Berachain has essentially integrated liquidity staking into the network protocol.

Although the operation of nodes on the Berachain mainnet requires 250,000 $BERA, the structure of Berachain is designed to distribute $BGT rewards and interest to liquidity providers. Therefore, aside from the different methods and sequences, Berachain essentially integrates liquidity staking within the network protocol.

However, in Berachain, existing protocols can only provide rewards and gain voting rights by collaborating with validators, or by establishing a self-sustaining flywheel model to launch their liquidity pools, as demonstrated by Kodiak and Honeypot Finance, by operating their own nodes.

In this context, Berachain's liquid staking protocol will provide the voting rights to determine the emission of $BGT) and the redemption function of (. This allows Berachain ecosystem projects to incorporate the liquidated $BGT into their protocol mechanism without the need to negotiate with validators or nodes. In other words, this makes it easier for ecosystem protocols to adopt a structure that tightly integrates the PoL mechanism.

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) Infrared

Infrared is a liquid staking protocol co-incubated with Kodiak through Berachain's "Build a Bera" program.

The Infrared-operated vaults can accept LP tokens from liquidity pools, generating $BGT interest rates while running network nodes. When users deposit LP tokens into these vaults, Infrared will use these tokens to generate $BGT, and users can claim $iBGT### that has been liquidated in proportion to their deposited LP tokens.

Users can utilize the received $iBGT in the following ways:

• Stake in Infrared to receive rewards generated by the node
• Use in other DeFi protocols
• Sell for profit

Therefore, Infrared concentrates and distributes the rewards generated by the PoL mechanism by turning $BGT into a liquid token, providing benefits to fewer $iBGT stakers, while also helping other protocols in the Berachain ecosystem to incorporate $iBGT into their protocols, allowing other platforms to offer higher returns for their users. In addition, Infrared plans to launch new features that will allow them to receive and liquidate the $BERA needed for running nodes while distributing profits.

The best example of effectively utilizing the Infrared feature is Kodiak's Island Pool, which we have also briefly introduced in the aforementioned DEX field. After the mainnet launch, Infrared plans to launch Kodiak's Island Pool (, which has been operating on the testnet ), allowing users to utilize Kodiak's CLAMM for more efficient $iBGT farming, and the $iBGT received can be re-staked in Infrared or re-deposited into Kodiak's $iBGT/$BERA Island Pool for more $iBGT farming. Of course, users can also choose other gameplay options within the ecosystem.

Thanks to the interconnectivity of this protocol and effective ecological gameplay, Infrared has gained significant attention from many users, currently accepting the most $BGT delegation on the bArtio Testnet. Additionally, many ecological projects have also partnered with Infrared and plan to launch various derivative products, indicating that Infrared will become the most important infrastructure after the mainnet launch.

At the same time, the specific details regarding how Infrared will use the delegated $BGT to select the $BGT's Emission have not been made public. Therefore, it will be quite important to closely monitor whether Infrared will implement these processes in a decentralized manner, as well as to whom the voting rights for its held $BGT will be provided.

( BeraPaw

BeraPaw is also a liquidity staking protocol, but they do not run their own nodes. Instead, they operate a treasury between different nodes and liquidity pools registered with BeraPaw, issuing $LBGT as the settlement token for $BGT.

The governance token of BeraPaw is $PAW. Users can vote on which liquidity pools should receive $BGT using the $BGT they hold in BeraPaw. Node operators distribute the reward income generated from staking $BGT to the holders of $LBGT through this method.

BeraPaw's structure divides the use of the $BGT token into two types: $LBGT and $PAW, where 1) receives rewards and 2### votes for the $BGT emission pool. Through this structure, users and protocols using the $PAW token for $BGT Emission voting can exercise more voting rights with relatively less capital. Therefore, protocols seeking initial liquidity within the Berachain ecosystem are expected to actively utilize $PAW to generate $BGT rewards for their liquidity pools.

The above are two liquidity staking protocols that are ready to officially launch on Berachain. While these protocols not only allow for more derivative products but also give users more ways to play, they also make the ecosystem more complex. In the Berachain network, the power and status of nodes will be proportional to the amount of $BGT delegated, and the liquidity staking protocols that provide $BGT liquidation functions are expected to be adopted by many users and protocols, becoming core infrastructure.

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Lending

Berachain also has a native lending protocol BEND, offering the following features:

• Use $WBTC and $WETH as collateral to borrow $HONEY
• Deposit $HONEY

Unlike typical lending protocols, BEND has two notable features: 1( $HONEY cannot be used as collateral, and deposits of 2) $WBTC and $WETH do not accrue interest, but $BGT rewards are generated when borrowing $HONEY.

Through this structure, BEND strengthens the triple token economic structure of Berachain, generating basic interest for $HONEY, while increasing lending demand through $BGT, enriching the liquidity of the ecosystem. Users can also...