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Blockchain

Berachain Review: Blockchain Layer 1 with Proof of Liquidity consensus

May 23, 2024 - Around 6 mins mins to read
Berachain is a Layer 1 blockchain developed using the Cosmos SDK, designed to be highly compatible with EVM. It operates on a unique Proof of Liquidity (POL) consensus mechanism. Through POL, Berachain tackles two significant challenges simultaneously: liquidity and network decentralization.
Berachain Review Blockchain Layer 1 with Proof of Liquidity consensus
Table Of Contents
  1. What is Berachain?
  2. Main feature of Berachain
  3. Products of Berachain
  4. Berachain Ecosystem
  5. Tokenomics and Use Case
  6. Team and Investors
  7. Roadmap
  8. Conclusion
  9. FAQs

What is Berachain?

Berachain Review: Blockchain Layer 1 with Proof of Liquidity consensus

Berachain is a Layer 1 blockchain that utilizes the Cosmos SDK and aims to be solidly compatible with EVM. It deploys a unique consensus mechanism known as Proof of Liquidity (POL). Deploying POL, Berachain can take on two major challenges: liquidity and decentralization of the network.

In Berachain, POL is integrated with CometBFT, which is a consensus mechanism developed based on the Cosmos SDK. This combination increases the speed of network processing and reduces the cost of transactions. Its EVM compatibility is the unique factor for Berachain, allowing the seamless migration of applications developed on Ethereum without making substantial modifications.

Read More: Dymension Review: Layer 1 Blockchain Promotes Interaction With Cosmos

Main feature of Berachain

Proof of Liquidity

    image 124

    As its name, Proof of Liquidity (POL) is the incentive mechanism that allows Berachain to incentivize its users to supply liquidity on Berachain. LPs on Berachain will be rewarded with BGT tokens for supplying liquidity in all the DeFi protocols’ liquidity pools on Berachain. BGT is the exclusive token that users stake to delegate to validators, which dictates how much BGT they can delegate to determine the quantity of block creation allocated to them. Validators use BGT to vote on the future inflation reward rate for BGT in any Berachain liquidity pool.

    In the initial phase, the eligible pools will be a few core protocols deployed on Berachain, including BEX, Berps, and Bend. In the future, once POL is stabilized, Berachain will open the POL mechanism to all liquidity pools from other protocols, which are deployed in smart contracts, to receive BGT.

    Polaris EVM

    image 125

    Polaris EVM is a lightweight modular framework designed with Cosmos-SDK-Modular. It enables the development of state transition and custom modules, which makes the development of state transitions and smart contracts powerful and efficient, promoting application development on Berachain in a convenient and flexible way.

    CometBFT

    CometBFT: CometBFT is the consensus tool that guarantees secure application replication and that all computers record transactions in the same order. Safety is guaranteed under two conditions:

    • Less than one-third of the computers experience any failures.
    • Consistency is maintained by ensuring that all non-faulty computers access the same transaction log and compute the same state.

    Tri-Token System

    image 127 2

    Berachain has introduced a system called Tri-Token, comprising three tokens that work in unison on the platform:

    • BERA: This token serves as the transaction fee on Berachain.
    • BGT: Berachain’s governance token adheres to the ERC-721 standard (the NFT token standard) and is non-transferable. BGT holders can vote on Berachain’s issues and receive extra rewards from the platform’s transaction fees.
    • HONEY: Berachain’s stablecoin is backed by the assets staked by users.

    Three tokens work like this: Stake various tokens to get BERA. Stake BERA for BGT, Berachain’s governance token. Holders can govern the platform, enjoy benefits, and earn rewards. Use staked tokens as collateral to borrow HONEY stablecoin. HONEY can be used for trading on platforms using vAMM on Berachain. Staked tokens provide liquidity with HONEY, bolstering the ecosystem. Testing in Artio testnet before mainnet launch. Engage with tokens during testnet for airdrop chance later.

    Read More: Cosmos Will Launch Cosmos Hub Improvement Process “CHIP” in 2024

      Products of Berachain

      image 126
      • BEX: AMM enables token exchange transactions, offering liquidity to earn BGT rewards.
      • BERPS: Perp DEX platform for asset trading with up to 100x leverage.
      • PEND: A money market for lending HONEY or using other assets as collateral to borrow HONEY.
      • HONEY: A protocol for minting Stablecoin HONEY by locking USDC.
      • BGT Station: A governance protocol where BGT holders can participate in Staking for Validators and Governance Voting on Berachain.

        Berachain Ecosystem

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        Berachain is constructing its own ecosystem comprising components from various sectors:

        • DeFi: Beradrome, Aori, Honeypot Finance,…
        • NFT: Bera Collective, Bera Punks, Beranames,
        • Gaming: Gamblino, Wizzwoods, BOINK,…
        • Infrastructure: Shogun, Infrared, Hyacinth
        • DAO: MijaniDao, Apiology DAO, notrealDAO,…

        Tokenomics and Use Case

        So far, Berachain hasn’t officially announced issuing the three kinds of tokens BERA, BGT, and HONEY because these tokens are only used in the Artio testnet.

        Team and Investors

        Team

        Most of the core project members are anonymous. Details are not available about key figures such as

        • Smokey The Bera, Director and Founder
        • Homme Bera, Founder
        • Dev Bear, CTO, Founder

        It is noteworthy that Dev Bear used to work for Apple, and other team members have a background in Terraform Labs, developers of Luna, Amazon, among others.

        image 128

        Investor and partners

        Berachain has closed a $42 million Series A funding round in April 2023, led by Polychain Capital. Other investors involved in this round were Shima Capital, Hack VC, Robot Ventures, and many more.

        image 129
        image 128

        Berachain has secured $142 million through two funding rounds:

        • Series A round: Raised $42 million led by Polychain Capital, with participation from other funds including Tribe Capital, Robot Ventures, Hack VC, Shima Capital, and more.
        • Series B round: Secured $100 million led by Framework Ventures and Brevan Howard, with participation from other funds such as Polychain Capital, HashKey Capital, Tribe Capital, Arrington XRP Capital, Sandeep Nailwal, Hypersphere Ventures, Samsung Next, and others.

        Roadmap

        There is currently no official roadmap available for the project.

        Conclusion

        Berachain is a Layer 1 blockchain developed using the Cosmos SDK, designed with strong compatibility with EVM. It operates on a novel Proof of Liquidity (POL) consensus mechanism.

        CoinCu rates Berachain as extremely promising for airdrop hunting due to the project’s successful fundraising efforts.

        FAQs

        1. What are the specific features of Berachain that guarantee an increase in blockchain performance?

        The main features of Berachain, which increase blockchain performance, include the consensus mechanism with high throughput, smart contract execution, and state management. These features allow the blockchain to process transactions with low latency and high throughput, making it suitable for demanding dApps.

        2. How does Berachain support developers in building dApps?

        Berachain supports developers by providing a comprehensive suite of developer tools, which includes a robust SDK, detailed documentation, and an active developer community. All these facilities make the development process straightforward and help in creating efficient and secure dApps.

        3. What does the governance model of Berachain look like?

        The governance model of Berachain is decentralized, with stakeholders enabled to take part in the decision-making processes. Token holders can vote for protocol changes, upgrades, and any other critical decisions that the platform needs to make in its progress toward maturation and evolution in the best interest of the community.

        4. What are the potential use cases that Berachain can support?

        Berachain is suitable for supporting a variety of use cases, such as DeFi applications, gaming, supply chain management, identity verification, and others. Its high performance and scalability make it suitable for any application that requires quick and reliable blockchain interaction.

        DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

        Cosmos

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        Author

        William

        In the fast-paced world of day trading, I've honed my skills for over six years using technical analysis tools and crafting short-term strategies. My expertise isn't from textbooks but from the trenches of online trading communities. I excel at reading chart patterns, applying technical analysis, and mastering risk management. "The market is about probabilities," I declare. As Editor at Coincu, I empower readers with the insights and strategies to conquer the dynamic world of day trading.