Discussion of Berachain Ecosystem Features and Overview of Core Projects Before Coin Issuance

Introduction

Berachain is a Layer 1 network featuring the PoL(Proof of Liquidity) consensus mechanism, aligning the interests of validators, liquidity providers, and the protocol. Currently, Berachain is conducting its second test network "bArtio Testnet" to address the issues discovered in the first test network.

Many ecological protocols have 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 participating in testing Berachain's PoL mechanism has exceeded 2.38 million. Although it is still in the test network phase, this data shows that the market's attention towards Berachain and its ecosystem is quite high.

Starting from the end of 2024, the founder of Berachain, Smokey The Bera, has recently introduced Boyco through a tweet, suggesting that "Q5 will happen before April," indicating that the mainnet launch is imminent. This has also attracted 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 instead created a significant barrier to entry 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 have outstanding performance in various fields 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 smooth liquidity trading within the ecosystem and ensure the effective operation of the PoL mechanism. In light of the existence of BEX, other DEXs that are 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.

2.1. Kodiak

Kodiak is a DEX that stands out from the Berachain incubation project "Build a Bera". In addition to supporting the Uniswap v2-style feature of BEX, which distributes liquidity evenly across the entire price range (, Kodiak also offers a CLAMM ) concentrated liquidity automated market maker function 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 more effectively farm $BGT. Additionally, 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, thereby 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 use in other protocols. However, Kodiak standardizes users' CLAMM liquidity positions through the Island feature, enabling these LP tokens to be utilized 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 validating nodes, and as of January 3rd, they have received the second highest BGT authorization in the bArtio Testnet.

( 2.2. Honeypot Finance

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

• Henlo DEX: A DEX specifically designed to protect users from MEV attacks, offering limit orders and Batch-A2MM functionality, allowing for the collection of user orders within a specific period 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 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 in case the fundraising target is not met within 24 hours.

Similar to 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 purchasing and burning $HPOT using node operation income, while 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 that are preparing for the Berachain mainnet, including BurrBear, which supports capital-efficient trading by aggregating more than three underlying assets with similar prices similar to Curve Finance ), 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 an authorization structure for native tokens, regular users who do not operate nodes will not be able to receive network rewards.

To solve this problem, 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 features, liquidity staking protocols have also become a core infrastructure of PoS networks.

In contrast, although the operation of Berachain's nodes 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 built liquidity staking into the network protocol.

Although the nodes on the Berachain main network require 250,000 $BERA to operate, the structure of Berachain is designed to distribute $BGT rewards and interest to liquidity providers. Therefore, aside from the differences in 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 to determine the Emission of $BGT) and 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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) 3.1. Infrared

Infrared is a liquid staking protocol jointly 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 uses these tokens to generate $BGT, and users can claim $iBGT( of $BGT) 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 nodes.
• 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, benefiting fewer $iBGT stakers, while also assisting 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 plans to launch new features that will enable them to receive and settle the $BERA required 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, the Infrared plan to launch Kodiak's Island Pool ### 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 reinvested into Kodiak's $iBGT/$BERA Island Pool for more $iBGT farming. Of course, users can also choose other gameplay options within the ecosystem.

Due to the interconnectivity of this protocol and effective ecological gameplay, Infrared has garnered the attention of many users, currently receiving the most $BGT delegations 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 on how Infrared will use the delegated $BGT to select the $BGT's Emission have not been disclosed. 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.

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) 3.2. 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 liquidation token for $BGT.

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

The structure adopted by BeraPaw divides the usage of the $BGT token into two types of tokens: $LBGT and $PAW. 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 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, which provides 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 earn interest, but borrowing $HONEY will generate $BGT rewards.

Through this structure, BEND enhances the triple token economic structure of Berachain, generating basic interest for $HONEY while increasing borrowing demand through $BGT.