A Deep Dive into Berachain
So much hype, so many threads on Twitter, but yet no detailed research. In this article, we’ll talk about everything about Bera, including…
So much hype, so many threads on Twitter, but yet no detailed research. In this article, we’ll talk about everything about Bera, including its roots.
Also, an alpha leak 👀🔥🔥 at the end of the article, so read up and stay tuned!
Berachain Roots
How often do you see an nft ecosystem evolve into a Defi protocol? Rarely or never. The Bear NFT ecosystem boasts 6 NFT collections with huge volume each and a sustainable high Fp.
Bond Bears NFT, which was created in August 2021, was a successful mint with a current fp (floor price) of 42.41 ETH, 1.4k ETH vol, only 6% listed 🥵, 126 supply, and 79% unique owners with the last sale of 46.8 ETH a month ago — these stats are impressive for an NFT with a high floor price.
Initially, Bond Bears NFT was meant to be a 10,000 supply collection, but instead, the team chose to launch all rebase by rebase instead of releasing all at once. And as with each rebase launch, the community grew stronger and bigger.
After a successful Bond Bears mint, 5 rebases were launched. These included: The Bond Bears, Boo Bears, Baby Bears, Band Bears, and Bit Bears NFT. All were successful with huge valuations, as the least fp is at 0.68e (Bit bears). 6 Bear NFT rebases with over 60k discord members and two powerful founders: @itsdevbear and @smokeythebera.
In April this year, the team announced plans to build a blockchain protocol — Berachain.
Berachain
Before we move to Berachain, let us first ask ourselves:
Why Berachain
Following the previous bull market L1 farm-and-dump shitshow, Berachain founders discovered that constructing a strong and sustainable L1, rather than an EVM copy-paste, would benefit the community long-term and during launch.
We all saw what transpired in the Luna case, with the decentralized stablecoin- $UST de-pegging and the aftermath.
These chaotic situations lead to a new age of defi security and protocol risk enlightenment. Hence, the creation of a better chain — Berachain.
What is Berachain?
Berachain is an EVM-compatible defi blockchain built on the Cosmos SDK, which uses its consensus tech “Proof of Liquidity” to allow users to stake L1 tokens and stablecoins to become Berachain validators thereby securing the blockchain.
The explanation above might seem confusing, but don’t fret, we’ll get into it.
Now, let’s talk about Cosmos SDK and how Berachain utilizes it.
Berachain, Cosmos-SDK, Tendermint, and Byzantine Fault Tolerant (BFT) correlation
An SDK is a toolkit for devs to use to build an application. Cosmos-SDK is an open-source tool for building application-specific blockchains. Devs can fork Cosmos to build their desired chains using the same framework as Cosmos, hence an EVMOS fork.
Berachain utilizes Tendermint- a software used to replicate and launch blockchain applications securely and consistently. When we say Tendermint launches a blockchain securely and consistently we mean, the Tendermint core will work even if the machine (chain) fails in up to 1/3 arbitrary ways. By consistently, we mean that every non-faulty machine sees and computes the same transaction log.
Tendermint offers its tools in the Cosmos-SDK consensus layer. Tendermint is made up of two technical components: Application BlockChain Interface (ABCI) and Tendermint core. The consensus engine is the Tendermint core while ABCI enables machines to process transactions written in any programming language.
Machines failing in arbitrary ways and malicious transactions are tolerated in a chain due to BFT. BFT isn’t a new tech but decades old, it became very useful due to the success of blockchain technology. BFT is similar to blockchain tech as it derives its name from blocks being hatched together where blocks contain cryptographic hashes of the previous block. In summary, BFT optimizes blockchain.
Tendermint can be used by developers to replicate BFT state machines of applications written in whatever programming language and development environment they prefer.
Proof of Liquidity
When Tendermint is combined with Berachain’s Proof of liquidity transactions become more scalable. This creates a new layer between the virtual machine and the consensus engine. When compared to a PoS blockchain, this layer helps to increase the efficiency of staked capital and increase resistance to Sybil (when an entity creates many duplicate accounts to disguise as real users to attack the network) attacks.
Proof of liquidity, is a term created by Berachain which allows users to stake different L1 tokens (wBTC, wAVAX, wETH, wADA, etc) and stable coins (USDC, DAI, etc) to a particular validator to earn block rewards.
How are validator voting weights measured? Block rewards distributed?
Voting weights and block rewards are measured and distributed due to the consensus vault. Proof of liquidity uses this mechanism to incentivize liquidity in the blockchain.
Users stake different tokens and are rewarded with tokens proportional to their staked funds. As said earlier before, these tokens are staked to a particular validator of stakers choice, this in return attributes the consensus power of the chosen validator.
If you don’t understand the above, it means you don’t understand the POS staking mechanism, can read this article
These staked assets help provide liquidity to Berachain’s vAMM (synthetic liquidity, which allows traders to buy and sell derivs)- native perpetual futures exchange and lending market.
Tokenomics
$Bera, $BGT, $Honey- these are the 3 native tokens used in Berachain.
Bera- stakers earn Bera token and it’s used as gas in the chain. All Bera used for gas is burned and it has an annual mint rate of 10%. $Bera stakers earn $BGT.
BGT- This is the governance token of Berachain. It’s proof for staked Bera. It’s non-transferable and meant for long-term purposes. In detail, a non-transferable ERC-721 token is deployed in the consensus vault, where holders vote on the emissions of fees (Bera) and more. BGT hodlers get incentives from dex swaps and $Honey interest rates, funding rates, and liquidation fees.
Honey- This is the native stable coin of Berachain. It is pegged to 1$ algorithmically; remember $UST Yh? Cool. It’s mintable with Berachain assets; it’s the stable medium in the chain used to pay funding rates on prep.
L1 and other deposited assets help maintain $Honey peg to $ by providing liquidity to Berachain vAMM — this is done through Peg Stability Module.
Projects launching on Berachain
I’ll only name a few cos they’re too many
Redacted Cartel — A meta governance protocol
Olympus Dao- An algo currently
CrocSwap- A Dex (decentralized exchange)
Temple dao- A virtual currency
Synapse Protocol- A cross-chain network
Neworder Dao- A defi incubation DAO
Paragons DAO- A defi p2e gaming (gamefi)
Abacus — An NFT valuation protocol
Gumball Protocol — A deep liquid Defi and NFT hub
Native Berachain Projects
Grizzli finance- A stablecoin swap dex
Honeypot finance- A Dex
BeraCreek finance- A money market on Bera
Apiarist finance- A money market and liquid staking solution on Bera
Conclusion
In 2 months from now, Berachain is excepted to launch. Stay positioned and hope for the best. About the alpha leak, tokens will be airdropped to Bong NFT hodlers of various 6 rebases.
Until then, ça va bear merci.
If you enjoyed this write-up and would like to reach out to me. This is my twitter handle — twitter.com/0xSalazar
Please remember to do your research. None of this is financial advice.