Discussion on the Characteristics of the Berachain Ecosystem and Overview of Core Projects Before Issuing Coins

Introduction

Berachain is a Layer 1 network characterized by its 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 discovered in the first testnet.

Many ecological protocols have already 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 Berachain's PoL mechanism 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, Smokey The Bera, the founder of Berachain, is promoting the "Q5 launch of the mainnet". Recently, he introduced Boyco through a tweet, hinting that "Q5 will happen before April" and 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, it is essential to 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 entry barrier for new users.

This article aims to explore various fields of the Berachain ecosystem to effectively reduce the barriers to user participation. We will discuss projects that have outstanding performance 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 smooth liquidity trading within the ecosystem and ensure the effective operation of the PoL mechanism. In light of the presence 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 the Berachain incubation project "Build a Bera". In addition to supporting BEX's Uniswap v2-style functionality, which averages 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 that helps 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 the liquidity range, 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 this LP coin 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 itself as a core infrastructure. They also operate their own Berachain nodes as validation nodes, and as of January 3, they have received the second highest BGT authorization in the bArtio Testnet.

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) 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, allowing 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 24-hour fundraising target is not met.

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

In addition, Honeypot Finance releases accumulated $BGT to the $HPOT liquidity pool, thereby enhancing the liquidity of $HPOT. The protocol also plans to increase the token's value by using node operation income to purchase and burn $HPOT, retaining the reward value paid to $BGT delegators, further solidifying the liquidity of $HPOT.

In addition to the aforementioned Kodiak and Honeypot Finance, there are also other protocols advocating for efficient and convenient trading functions preparing for the Berachain mainnet, including BurrBear, which supports capital-efficient trading by pooling three or more price-similar 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 an authorization structure for native tokens, general users who do not operate nodes cannot receive network rewards.

To address this issue, liquidity staking protocols distribute rewards by accepting the staking of native coins 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 coins they hold, thereby increasing the liquidity of the ecosystem. Through these functions, liquidity staking protocols have also become the 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 interest on liquidity provision when they deposit liquidity tokens obtained from ecological protocols into Berachain. Therefore, apart from the different methods and sequences, Berachain has essentially built 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 each 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 determining 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 structures that closely integrate the PoL mechanism.

) Infrared

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

The Infrared-operated vaults can accept LP tokens from the 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 (liquidated $BGT) proportional 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 profit

Therefore, Infrared is concentrating and distributing the rewards generated by the PoL mechanism to fewer $iBGT stakers by converting $BGT into a liquid token, 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 plans to launch new features that will enable 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, the Infrared plan will 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 received $iBGT can be restaked in Infrared, or re-deposited into Kodiak's $iBGT/$BERA Island Pool for further $iBGT farming. Of course, users can also choose other gameplay within the ecosystem.

Based on the protocol's interconnectivity and effective ecological gameplay, Infrared has gained the attention of many users, currently accepting the most $BGT delegation on the bArtio Testnet. In addition, many ecological projects have also collaborated 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 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 for the $BGT they hold will be granted.

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) 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 $BGT settlement token.

The governance token of BeraPaw is $PAW, and users can vote on which liquidity pools should receive $BGT using the $BGT held by BeraPaw. 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 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 voting for $BGT Emission with $PAW tokens can exercise more voting rights 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 gameplay options, 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 offers 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 2) deposits of $WBTC and $WETH do not earn interest, but borrowing $HONEY will yield $BGT rewards.

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 perform $BGT leveraged Farming by repeatedly swapping borrowed $HONEY back to $WETH, $WBTC and depositing into BEND.

Next, we will discuss in detail several major lending protocols to be launched on Berachain and the functions offered by each platform.

) BeraBorrow

BeraBorrow is an over-collateralized stablecoin issuance protocol that allows users to mint $NECT stablecoins. It not only permits common assets like $BERA and $HONEY but also allows B