Forward the Original Title：SANYUAN Labs: PoL+ Triple Token Model + Growth Flywheel? A Detailed Explanation of the New Public Blockchain Berachain

Introduction:

Recently, the Layer 1 public blockchain Berachain launched its public testnet, Artio, which, thanks to the current market’s hot topic of modular concepts, has exploded in popularity across the net. However, Berachain is not just about modularity; it boasts numerous technical innovations, such as the “Proof of Liquidity” consensus mechanism, a triple token model, and the EVM-compatible Polaris framework, among others. SANYUAN Labs will provide a detailed interpretation of the new public blockchain Berachain.

Project Introduction

Berachain is a Layer 1 (L1) public blockchain built on the Cosmos SDK and compatible with the Ethereum Virtual Machine (EVM). It utilizes a Proof of Liquidity mechanism for support. Berachain’s technology is based on Polaris, a high-performance blockchain framework designed for building EVM-compatible chains atop the CometBFT consensus engine.

Official Website: https://www.berachain.com/

Products and Innovation

1. Products

• Berachain Protocol: An L1 public blockchain built on the Cosmos SDK and compatible with the Ethereum Virtual Machine (EVM).
• BEX: The native token of Berachain, BEX, is used for acquiring new tokens and providing liquidity.

• Berachain Oracle: A fully integrated, universal price oracle with associated Cosmos modules and precompiles, enabling applications and users to interact with it.

  1. Innovation

• EVM Compatibility: Built on the Cosmos SDK and technically integrated with the EVM, making the development process easier and facilitating the early-stage ecosystem construction. It is reported that approximately 71 projects have been built on Berachain, with several already launched and the majority being native to Berachain. Ecosystem project link: Google Docs
• Polaris Framework : The EVM compatibility of Berachain comes from the Berachain Polaris EVM library. Polaris provides an improved EVM experience and is a highly scalable, interoperable EVM framework that is friendly to Ethereum developers.
• Modularity : Offers a modular EVM framework that provides an execution environment for smart contracts on Berachain, allowing any project to integrate and build new modular EVMs.
• Innovative Consensus Mechanism : In contrast to Ethereum’s Proof of Stake mechanism, Berachain adopts a Proof of Liquidity (PoL) mechanism, which achieves network liquidity, decentralization of stake, and coordination between protocols and validators through liquidity providers, liquidity mining, proof of liquidity, and liquidity governance.
• Three-Token Model : Separates the gas token and governance token, addressing to some extent the issue of liquidity loss caused by token staking.
• Meme Culture and Community Driven : The community has a positive atmosphere and embraces meme culture. In August 2021, the NFT series Bong Bears was launched at a mint price of 0.0694 ETH, leading to the creation of more Bears NFTs as shown in the figure below.

The total value is currently over 400 ETH：

• 1 bond (63E)
• 2 boo (20.6E*2)
• 4 baby (10E*4)
• 8 band (5.68E*8)
• 16 bit (3.45E*16)
• Bong （169E）

Community and User Data:

Social Media:

• Twitter: berachain on Twitter with 200K followers

• Telegram: BerachainPortal on Telegram with 2332 members

• Discord: berachain on Discord with 150.9k members, 21.7k online

Testnet Data

The testnet was launched on the 11th and attracted over 300,000 users in the first 48 hours, generating approximately 1 million transactions. At one point, the memory pool was completely full due to a massive number of requests, leading to the temporary suspension of the faucet to help alleviate network congestion. This situation was nearly unprecedented in the Cosmos ecosystem. Currently, participants can join the Artio testnet Odyssey event to receive airdrop rewards.

Economic Model:

Berachain adopts a unique three-token model, distinct from Ethereum, which has only one native token (ETH), and Terra, which has two types of tokens (LUNA, UST/SDT). Berachain has three native tokens:

1. $BERA: The gas token used as network fuel, with 10% inflation. It can be earned by validating transactions or providing liquidity on the Berachain platform.

2. $BGT: The mainnet token and governance token, obtained through staking $BERA. BGT is non-transferable, meaning it cannot be traded. It can be earned by performing certain actions in authorized dApps, such as:

   • Providing liquidity in native BEX

   • Borrowing at Bend HONEY

   • Supplying HONEY to Berps in the bHONEY vault

   Staking BGT allows users to create governance proposals and vote on them. The distribution of staking rewards and the decision on which LP pools receive BGT grants are governed by BGT. After authorization, you will start receiving various rewards from the network. BGT can also be burned to convert into BERA on a 1:1 basis, which is a one-way conversion; BERA cannot be converted back into BGT.

3. $HONEY: The native consensus staking stablecoin aimed to be pegged close to 1 USDC. It serves as a medium for protocol income distribution and is used for pairing with liquidity pools on Berachain, facilitating liquidity for native projects on the platform. Upon mainnet launch, HONEY can be minted through the HONEY dApp or purchased on BEX.

Operation:

• • Provide liquidity on Berachain using $BERA + $HONEY and other tokens to earn block rewards, Gas fees, and BGT.
• • Stake $BGT.
• • Stake $BGT to earn $BERA + $HONEY + $BGT.

Financing and Team:

Financing:

• On April 20, 2023, a $42 million Series A funding round was completed, valuing the project at $420 million. Participants in the round included Polychain (lead investor), OKVentures, Shimano Capital, and RobotVentures.

Additionally, there are individual investors worth noting:

• • Santiago Roel Santos: Former general partner at ParaFi Capital.
• • Zaki Manian: Head of Tendermint Labs and an advisor to the Cosmos project.
• • Joey Santoro: Founder of Fei Protocol. Despite the project’s failure, his experience could provide valuable insights for Berachain.
• • Georgios Vlachos: Co-founder of Axelar and a member of the founding team of Algorand.
• • Mustafa Al-Bassam: Co-founder and CEO of Celestia.

Team:

• The team is anonymous, but managing to secure $42 million in funding suggests a strong network and resources in the crypto field.

Summary

The unique three-token economic model separates gas and governance tokens, maximizing liquidity release and protecting the interests of active network participants (such as those contributing significant transactions and gas fees). This model resolves the conflict between stakeholder governance participation and liquidity. Therefore, Berachain is highly anticipated to lead DeFi innovation, creating protocols with high liquidity and capital efficiency.

As the user base grows and fee income increases, Berachain is expected to attract more users and ecosystem projects, further enhanced by its governance reward mechanism, forming a positive feedback loop.

However, it’s crucial to remain rational and monitor Berachain’s future development (including the project’s progress, ecosystem growth, and protocol security) closely.

Disclaimer：

1. This article is reprinted from [Medium], Forward the Original Title‘SANYUAN Labs：PoL+三代币+增长飞轮？详解新公链Berachain’,All copyrights belong to the original author [SANYUAN Labs 三元资本]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
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