Discussion on the Characteristics of the Berachain Ecosystem and Overview of Core Projects Before Coin Issuance

Introduction

Berachain is a Layer 1 network featuring the PoL (Proof of Liquidity) consensus mechanism, currently undergoing its second testnet "bArtio Testnet". As of January 2, 234 protocols have participated in the testing, with a total wallet count exceeding 2.38 million. Berachain founder Smokey The Bera recently hinted that the mainnet will launch before April, attracting both new and old users to join the ecosystem.

However, participating in the Berachain ecosystem requires an understanding of its PoL mechanism, and the complex financial products launched between protocols to gain PoL advantages before the mainnet launch have created a significant entry barrier for new users. This article aims to explore various areas of the Berachain ecosystem to lower the entry barriers for users. We will discuss outstanding projects in each area 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. Other DEXs that are preparing to launch on Berachain are also preparing various convenient and efficient services and strategies to attract users and liquidity.

Kodiak

Kodiak is a DEX that stands out from the Berachain incubated project "Build a Bera". In addition to supporting the Uniswap v2 features of BEX, it also offers CLAMM functionality 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, more effectively farm $BGT. Kodiak also offers the Island feature, which automatically resets and balances the CLAMM range, reducing the hassle of managing liquidity positions. This feature utilizes BEX to rebalance liquidity, establishing a complementary rather than competitive relationship.

Kodiak standardizes CLAMM liquidity positions through the Island feature, allowing LP tokens to be used in other protocols, promoting more flexible and diverse ecological gameplay. Kodiak has partnered with multiple projects in the ecosystem to establish a core infrastructure position. They also operate their own validation nodes and have received the second-highest BGT authorization in the testnet.

Honeypot Finance

Honeypot Finance is a protocol that supports all aspects of the token lifecycle, including the following sub-protocols:

• Henlo DEX: A DEX that protects users from MEV attacks, offering limit orders and Batch-A2MM features.

• Dreampad: A Launchpad protocol that provides incubation and financing opportunities for projects preparing to launch on Berachain.

• Pot2Pump: A platform that provides a safer environment for the issuance and trading of meme coins.

Honeypot Finance plans to operate as a validator after the mainnet launch, providing $HPOT as rewards to users who delegate $BGT. The protocol also plans to enhance the token's value by using node operation revenue to buy and burn $HPOT.

Liquidity Staking

Berachain has essentially built liquidity staking into its network protocol. The liquidity staking protocol will offer $BGT redemption functionality, allowing ecological projects to incorporate the liquidated $BGT into the protocol mechanism, making it easier to adopt a structure that closely integrates with the PoL mechanism.

Infrared

Infrared is a liquidity staking protocol co-incubated with Kodiak through Berachain's "Build a Bera" program. It operates a repository that accepts LP coins, generating $BGT interest rates while running network nodes. Users can receive $iBGT proportional to the amount of LP coins they deposit.

Users can utilize $iBGT in the following ways:

• Stake in Infrared, receive node rewards
• Use in other DeFi protocols
• Sell profit

Infrared will turn $BGT into a liquid token, concentrating rewards for $iBGT stakers, and also helping other protocols incorporate $iBGT. It also plans to launch new features that will allow it to receive and settle the required $BERA while running nodes and distributing profits.

BeraPaw

BeraPaw is a liquidity staking protocol that operates a treasury between different nodes and registered liquidity pools, 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 they hold in BeraPaw. Node operators distribute the staking $BGT rewards to $LBGT holders through this method.

Lending

Berachain has a native lending protocol BEND, providing the following functions:

• Use $WBTC and $WETH as collateral to borrow $HONEY
• Deposit $HONEY

Unlike typical lending agreements, BEND has two notable features: $HONEY cannot be used as collateral, and deposits of $WBTC and $WETH do not earn interest, but borrowing $HONEY will generate $BGT rewards.

BeraBorrow

BeraBorrow is an over-collateralized stablecoin issuance protocol that allows users to mint $NECT stablecoins. It permits ordinary assets like $BERA, $HONEY, as well as BEX and Berps LP tokens, and Infrared's $iBGT as collateral.

BeraBorrow has governance token $POLLEN in addition to $NECT, which can be used as an incentive token for:

• Reward for obtaining $BGT Emission liquidity pool
• Encourage collateral deposits to the liquidity pool of up to $NECT debt.
• Distributed as rewards to depositors in the liquidity stability pool.

Gummi

Gummi is a lending protocol that operates without the need for oracles, allowing anyone to create lending pools without restrictions. Gummi plans to use any assets from Berachain to provide 100x leveraged positions.

Derivative Protocol

SMILEE

SMILEE is an options protocol that can provide position creation for hedging positions in DEX liquidity. The options created by SMILEE generate more profits when price volatility is high, which is completely opposite to the impermanent loss (IL).

Users can establish three types of option positions by paying the option premium in SMILEE:

• Bull: Bet on a significant price increase
• Bear: Bet on a significant price decline
• Smile: Bet on significant upward or downward price fluctuations

Exponents

Exponents implements leveraged positions on all assets that will not be liquidated through its self-developed reverse asset issuance protocol IBC. IBC uses a reverse Bonding Curve, where the price decreases as demand increases, and the number of receivable assets increases when collateral assets increase.

Other Projects

Goldilocks

Goldilocks is a DAO and platform that develops DeFi infrastructure exclusive to Berachain, including:

• Goldiswap: FSL pool that guarantees the lowest floor price for $LOCKS and PSL pool for exchanging $HONEY and $LOCKS
• Goldilend: A collateral lending protocol for Berachain ecosystem NFTs
• Goldivaults: Utilize time-locking of assets to generate interest, providing features similar to Pendle Finance.

Beradrome

Beradrome gathers user liquidity coins and distributes profits and rewards to users. It uses three native coins:

• $oBERO: Rewards for users who deposit liquidity tokens
• $BERO: main coin, value guaranteed to be above 1 $HONEY
• $hiBERO: governance token, can vote to determine the liquidity pool to obtain $oBERO and gain protocol profits.

Yeet

Yeet is an on-chain betting game protocol using $BERA. Users bet $BERA to participate in the game, and in the end, depositors take 80% of the total deposits. Users who do not win the game receive $YEET as a reward, which can be bet into the Liquidity Trifecta Vault to earn interest.

Ramen

Ramen is a Launchpad protocol that helps new projects with promotion and fundraising. It supports two modes:

• Fixed price model: Purchase tokens at a fixed price
• Price discovery mode: determine the settlement price through blind bidding

PuffPaw

PuffPaw is a Vape 2 Earn project where users earn tokens through electronic cigarettes. It encourages the use of low-nicotine e-liquids and distributes higher $VAPE rewards to promote quitting smoking.

Community

The Honey JAR

The Honey JAR is a community-driven flywheel that establishes sticky liquidity. By issuing the Honeycomb NFT series, it expands the community and collaborates with ecological projects to provide benefits to NFT holders.

The Honey JAR produces Berachain educational materials, providing services for new users. It is also a venture studio, incubating projects such as S&P and Bera Infinity. As of January 11, the number of directly involved or partnered projects has reached 89, establishing its core community position.

Conclusion

The foundational protocol of the Berachain ecosystem combines various functions to create complex financial services, attracting users with "high returns" and "entertainment" through the PoL mechanism and a unique community culture. Berachain recently announced the Boyco, RFA, and RFC plans to support the issuance of $BERA and initial ecosystem liquidity, hinting that the mainnet is about to be launched.

As of January 31, the total accumulated deposits in the Pre-Boyco and Boyco vaults reached $2.35 billion. Considering that the PoL structure encourages liquidity inflow, the TVL is expected to increase significantly after the mainnet launch.

The ecosystem and community successfully built by Berachain before the mainnet launch is a rare case in the industry and will serve as an important reference for future projects.