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

Introduction

Berachain is a Layer 1 network characterized by the PoL (Proof of Liquidity) consensus mechanism, which aligns the interests of validators, liquidity providers, and the protocol. Currently, Berachain is conducting its second testnet "bArtio Testnet" to address the issues discovered in the first testnet.

As of January 2, 234 agreements have been deployed on the bArtio Testnet, and the total number of wallets participating in testing the PoL mechanism has exceeded 2.38 million. Although it is still in the testnet phase, this data shows that the market's attention towards Berachain and its ecosystem is quite high.

Smokey The Bera, the founder of Berachain, recently hinted in a tweet that "Q5 will happen before April," indicating that the mainnet is about to launch. This has also attracted new and old users to join the Berachain ecosystem.

However, to participate in the Berachain ecosystem, one must understand its PoL mechanism. Before the mainnet launch, the various complex financial products introduced to gain an advantage in the PoL mechanism have instead created a higher entry barrier for new users.

This article aims to explore various areas of the Berachain ecosystem to effectively lower the barriers to user participation. We will discuss projects that stand out in each area and detail how each protocol utilizes the PoL mechanism.

DEX

Berachain has a native DEX called BEX, which will be launched as BeraSwap on the mainnet. BeraSwap will support seamless liquidity trading within the ecosystem and ensure the effective operation of the PoL mechanism. Given the existence of BEX, other DEXs preparing to launch on Berachain are also preparing various more convenient and efficient services and strategies to attract users and liquidity.

Kodiak

Kodiak is a DEX that stands out from the "Build a Bera" incubation project of Berachain. In addition to supporting BEX's Uniswap v2-style feature that averages 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 within a narrow range through the CLAMM pool, more effectively farming $BGT. Additionally, Kodiak offers the Island feature, which helps users automatically reset and balance the CLAMM range, reducing the hassle of managing liquidity supply positions. This feature utilizes BEX to rebalance liquidity, thereby establishing a complementary rather than competitive relationship.

Furthermore, due to the customizability of liquidity ranges, CLAMM liquidity position tokens are often difficult to be utilized by other protocols. However, Kodiak standardizes users' CLAMM liquidity positions through the Island feature, allowing this LP token to also be used 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 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, providing limit orders and Batch-A2MM functionalities, capable of collecting 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 coin 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 the event that 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 coin $HPOT as a delegation reward to users who delegate $BGT.

In addition, Honeypot Finance leverages the accumulated $BGT to release into 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 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 high efficiency and convenient trading functions preparing for the Berachain mainnet, including BurrBear, which supports capital-efficient trading by aggregating three or more price-similar underlying assets ) similar to Curve Finance ###, the liquidity aggregator OogaBooga, and the 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 native coins, 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 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 nodes requires 69,420 $BERA, its structure ensures that when liquidity providers deposit the liquidity tokens obtained from the ecological protocol into Berachain, they will receive network rewards calculated in $BGT as well as liquidity provision interest. Therefore, aside from the differences in 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 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 to decide the issuance of $BGT( and the redemption functionality of ). This allows Berachain ecosystem projects to incorporate the liquidated $BGT into their protocol mechanisms without needing to negotiate with validators or nodes. In other words, this makes it easier for ecological protocols to adopt a structure that closely integrates the PoL mechanism.

( Infrared

Infrared is a liquidity staking protocol incubated in collaboration 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) that has been liquidated in proportion 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 helps concentrate and distribute the rewards generated by the PoL mechanism to fewer $iBGT stakers by converting $BGT into a liquid token, while also assisting other protocols in the Berachain ecosystem to incorporate $iBGT into their protocols, allowing their platforms to offer users higher returns. In addition, Infrared plans to launch new features that enable them to receive and settle the $BERA required for node operation while running nodes and distributing profits.

The best example of effectively utilizing the Infrared function is Kodiak's Island Pool, which we briefly introduced in the DEX field above. After the mainnet launch, the Infrared plan will launch Kodiak's Island Pool###, which is currently operating on the testnet(, allowing users to use 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 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 delegation in 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 on how Infrared will use the 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 it will grant the voting rights of its held $BGT.

![Before issuing coins, discussion of Berachain ecosystem features and overview of core projects])https://img-cdn.gateio.im/webp-social/moments-335ffb36053ab8848f45da2d49ca6254.webp(

) 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. 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 use of the $BGT token into two types of tokens: $LBGT and $PAW, with 1( receiving rewards and 2) voting 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 about to officially launch on Berachain. Although these protocols not only allow for more derivative products but also give users more ways to play, they also make the ecosystem more complex. In the Berachain network, the power and status of nodes are 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.

![Discussion on the characteristics of the Berachain ecosystem and an overview of core projects before issuing coin]###https://img-cdn.gateio.im/webp-social/moments-bd6766a4939b4f048591e57df2445590.webp)

Lending

Berachain also has a native lending protocol BEND, which provides the following functions:

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

• Deposit $HONEY

Unlike typical lending agreements, BEND has two notable features: 1) $HONEY cannot be used as collateral, and deposits of 2( $WBTC and $WETH do not accrue interest, but borrowing $HONEY will earn $BGT rewards.

Through this structure, BEND strengthens Berachain's triple token economic model, generating basic interest for $HONEY while increasing lending demand through $BGT, enriching the ecosystem's liquidity. 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 that are set to be launched on Berachain and the features offered by each platform.

) BeraBorrow

BeraBorrow is an over-collateralized stablecoin issuance protocol where users can mint $NECT stablecoins. It not only allows ordinary assets like $BERA and $HONEY but also accepts BEX and Berps LP tokens, as well as Infrared's $iBGT as collateral assets. The $NECT minted with collateral assets can be deposited into BeraBorrow's liquidity stable pool, where depositors can collect borrowing fees and liquidation fees from $NECT borrowers, establishing a structure that supports the basic needs of $NECT.

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