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 the PoL (Proof of Liquidity) consensus mechanism, aligning the interests of validators, liquidity providers, and protocols. Currently, Berachain is conducting its second testnet "bArtio Testnet" to address issues identified in the first testnet.

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

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

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

This article aims to explore various fields of the Berachain ecosystem to effectively lower the barriers to user participation. We will discuss projects that perform outstandingly in various areas and detail how each protocol utilizes the PoL mechanism.

DEX

Berachain has a native DEX called BEX, which will be launched on the mainnet as BeraSwap. BeraSwap will support seamless liquidity trading within the ecosystem and ensure the effective operation of the PoL mechanism. Given 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, in order to 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 of distributing liquidity evenly 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 within a narrow range through the CLAMM pool to farm $BGT more effectively. In addition, Kodiak also offers an Island feature that helps users automatically reset and balance the CLAMM range, reducing the hassle of managing liquidity supply positions. This feature uses 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 utilized by other protocols. However, Kodiak standardizes users' CLAMM liquidity positions through the Island feature, allowing these LP tokens to be used in other protocols, promoting 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 validator nodes, and as of January 3rd, they 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, offering limit orders and Batch-A2MM functionality, which can collect user orders within a specific period and execute them at the same price.

• Dreampad: a Launchpad protocol that provides incubation and financing opportunities for projects preparing to launch on Berachain, while ensuring fair token issuance 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 fundraising target is not met within 24 hours.

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

In addition, Honeypot Finance releases the accumulated $BGT to the $HPOT liquidity pool, thereby enhancing the liquidity of $HPOT. The protocol also plans to increase the token value by using node operating income to buy and burn $HPOT, retaining the reward value paid to $BGT delegators, 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 preparing for the Berachain mainnet, including BurrBear, which supports capital-efficient trading similar to Curve Finance by aggregating more than three underlying assets with similar prices ), the liquidity aggregator OogaBooga, and the cross-chain abstract trading protocol Shogun.

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Liquid 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 obtain network rewards.

To solve this problem, liquidity staking protocols distribute rewards by accepting the staking of native tokens and operating delegated nodes, 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, while 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, aside from the different methods and sequences, Berachain has essentially built liquidity staking into the network protocol.

Although Berachain requires 250,000 $BERA for node operations on the mainnet, the structure of Berachain is designed to distribute $BGT rewards and interest to liquidity providers. Therefore, apart from different methods and sequences, Berachain essentially incorporates liquidity staking into the network protocol.

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

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

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) Infrared

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

The storage vaults powered by Infrared can accept LP tokens from liquidity pools, generating $BGT interest rates while operating 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 settled 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 nodes.
• Use in other DeFi protocols
• Sell for profit

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

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

Based on the interconnectivity of the protocol and effective ecological gameplay, Infrared has garnered attention from many users, currently accepting the most $BGT delegation in the bArtio Testnet. In addition, 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.

Meanwhile, the specific details regarding how Infrared will use delegated $BGT to select the Emission of $BGT have not been made public. Therefore, it will be quite important to closely monitor whether Infrared will implement these processes in a decentralized manner and to whom the voting rights of its held $BGT will be granted.

( BeraPaw

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

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

The structure adopted by BeraPaw divides the use of the $BGT token into two types of tokens: $LBGT and $PAW, where 1) receives rewards and 2( votes for the $BGT emission pool. Through this structure, users and protocols using $PAW tokens for $BGT Emission voting can exercise more voting power with relatively less capital. Therefore, protocols seeking initial liquidity in 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 provide users with 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 delegated $BGT, 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, providing the following features:

• Use $WBTC, $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 generate interest, but will yield $BGT rewards when borrowing $HONEY.

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