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, aligning the interests of validators, liquidity providers, and protocols. Currently, Berachain is conducting its second testnet "bArtio Testnet" to address the issues found 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 participating in testing Berachain's PoL mechanism has also exceeded 2.38 million. Although it is only in the testnet phase, these figures indicate that there is considerable market interest in Berachain and its ecosystem.

Starting from the end of 2024, the founder of Berachain, Smokey The Bera, announced the "Q5 mainnet launch" through a recent X tweet introducing Boyco, suggesting that "Q5 will happen before April" and 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 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 areas of the Berachain ecosystem to effectively reduce the barriers to user participation. We will discuss projects that have performed outstandingly in various fields and detail how each protocol leverages 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. Given 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.

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 features, which average liquidity distribution 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. 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 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 use in other protocols. However, Kodiak standardizes users' CLAMM liquidity positions through the Island feature, allowing this LP coin to be used in other protocols as well, 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 validator nodes, and as of January 3, 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, 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 functionalities such as preventing bot sniping and refunding participating users in case the 24-hour fundraising target is not met.

Like 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 releases the accumulated $BGT to the $HPOT liquidity pool, thereby enhancing the liquidity of $HPOT. The protocol also plans to enhance the value of the token by using node operation revenue to buy and burn $HPOT, while 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 other protocols advocating for efficient and convenient trading features preparing for the Berachain mainnet, including BurrBear, which supports capital-efficient trading by aggregating three or more underlying assets with similar prices ) similar to Curve Finance ###, liquidity aggregator OogaBooga, and cross-chain abstract trading protocol Shogun.

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 a native coin, general users who do not operate nodes cannot receive network rewards.

In order 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 functions, 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 ecological protocols into Berachain. Therefore, aside from the differences in methods and sequence, Berachain has essentially built liquidity staking into the network protocol.

Although the operation of nodes on the Berachain main network requires 250,000 $BERA, the structure of Berachain is designed to distribute $BGT rewards and interest to liquidity providers. Therefore, aside from differences in 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, as demonstrated by Kodiak and Honeypot Finance, by establishing a self-sustaining flywheel model to launch their liquidity pools by operating their own nodes.

In this context, Berachain's liquid staking protocol will provide the voting rights for determining the Emission of $BGT( and the cashing out 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 closely integrates PoL mechanisms.

( 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 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) of the settled $BGT### in proportion to their deposited LP tokens.

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

• Staking in Infrared to receive rewards generated by nodes
• Use in other DeFi protocols
• Sell for profit

Therefore, Infrared concentrates and distributes the rewards generated by the PoL mechanism to fewer $iBGT stakers by turning $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 also plans to launch new features that will allow them to receive and settle the $BERA required for running nodes while distributing profits.

The best example of effectively utilizing the Infrared feature is Kodiak's Island Pool, which we have 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 use Kodiak's CLAMM for more efficient $iBGT farming, and to restake the received $iBGT in Infrared, or to redeposit it 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 gained the attention of many users, currently accepting the most $BGT delegations on 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.

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 of the $BGT it holds 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, issuing $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 they hold in 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 utility 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 the $PAW token 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 set to officially launch on Berachain. Although these protocols not only allow for more derivative products but also provide users with more ways to play, they also complicate the ecosystem. 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 functionality are expected to be adopted by many users and protocols, becoming core infrastructure.

Lending

Berachain also has a native lending protocol called 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 earn $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 execute $BGT leveraged Farming by repeatedly swapping borrowed $HONEY back to $WETH and $WBTC and depositing it into BEND.

Next, we will discuss in detail several major lending protocols that are set to launch on Berachain and the features offered by each platform.

) BeraBorrow

BeraBorrow is an over-collateralized stablecoin issuance protocol, allowing users to