Discussion on Berachain's Ecological Characteristics and Overview of Core Projects Before Issue Coin

Introduction

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

Many ecological protocols have already been deployed on the bArtio Testnet version. As of January 2, according to the Berachain official website, a total of 234 protocols are participating in the bArtio Testnet, and the cumulative number of wallets involved in testing Berachain's PoL mechanism has exceeded 2.38 million. Although it is still in the testnet phase, this data shows that the market's attention to Berachain and its ecosystem is quite high.

Starting from the end of 2024, Smokey The Bera, the founder of Berachain, has recently introduced Boyco through a tweet on X, hinting that "Q5 will happen before April", indicating that the launch of the mainnet is imminent. This has also attracted both new and old users to join the Berachain ecosystem.

However, to participate in the Berachain ecosystem, one must understand their PoL mechanism. Before the mainnet launch, the various complex financial products introduced by protocols to gain an advantage in the PoL mechanism have created a significant barrier to entry 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 perform outstandingly in various fields 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 smooth 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 effectively compete with BEX, in order to attract users and liquidity.

2.1. Kodiak

Kodiak is a DEX that stands out from Berachain's incubation project "Build a Bera". In addition to supporting the Uniswap v2-like features of BEX, which distribute liquidity evenly across the entire price range (, Kodiak also offers CLAMM ) concentrated liquidity automated market maker ( features 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 to farm $BGT more effectively. In addition, Kodiak also offers an Island feature to help users automatically reset and balance the CLAMM range, reducing the hassle of managing liquidity supply positions. This feature uses BEX to rebalance liquidity, thereby establishing a complementary rather than competitive relationship.

Moreover, due to the customizability of liquidity ranges, the tokens of CLAMM liquidity positions are often difficult to use in other protocols. However, Kodiak standardizes users' CLAMM liquidity positions through the Island feature, allowing this LP coin to be used in other protocols, facilitating more flexible and diverse ecological gameplay.

Before the mainnet launch, Kodiak has collaborated with many projects within the Berachain ecosystem, establishing its position as a core infrastructure. They also operate their own Berachain nodes as validating nodes, and as of January 3, they have received the second highest BGT authorization in the bArtio Testnet.

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) 2.2. 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, offering limit orders and Batch-A2MM functionality, which can collect user orders within a specific period and execute them at the same price.

• Dreampad: a Launchpad protocol that provides incubation and financing opportunities for projects ready to launch on Berachain, while ensuring a fair token 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 goal is not met.

Like Kodiak, Honeypot Finance also plans to operate as a validator after the mainnet launch, offering its governance token $HPOT as delegation rewards to users who delegate $BGT.

In addition, Honeypot Finance releases accumulated $BGT to the $HPOT liquidity pool, thereby enhancing the liquidity of $HPOT. The protocol also plans to increase the token value by using the income from node operations to purchase and burn $HPOT, 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 also other protocols promoting efficient 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 (, liquidity aggregator OogaBooga, and cross-chain abstract trading protocol Shogun.

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Liquidity 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 a native coin, general users who do not operate nodes will not be able to receive network rewards.

To solve this problem, 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's nodes requires 69,420 $BERA, its structure allows liquidity providers to receive network rewards calculated in $BGT as well as liquidity provision interest when they deposit the liquidity tokens obtained from the ecological protocol into Berachain. Therefore, apart from the different methods and sequences, Berachain has essentially built liquidity staking into the network protocol.

Although the operation of nodes on the Berachain main network requires 250,000 $BERA, the structure of Berachain is designed to distribute $BGT rewards and interest to liquidity providers. Therefore, aside from the different methods and sequences, Berachain essentially integrates 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 $BGT) voting rights to determine the Emission and the redemption function 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 ecosystem protocols to adopt a structure that closely integrates the PoL mechanism.

) 3.1. Infrared

Infrared is a liquidity staking protocol co-incubated 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 operating network nodes. When users deposit LP tokens into these vaults, Infrared will use these tokens to generate $BGT, and users can claim $iBGT### of the $BGT( that has been liquidated, proportional to the LP tokens they deposited.

Users can utilize the received $iBGT in the following ways:

• Stake in Infrared to receive rewards generated by nodes

• Use in other DeFi protocols

• Sell profit

Therefore, Infrared concentrates and distributes the rewards generated by the PoL mechanism by turning $BGT into a liquid token, benefiting fewer $iBGT stakers, while also assisting other protocols in the Berachain ecosystem to incorporate $iBGT into their protocols, allowing their platforms to provide higher returns for their users. Additionally, Infrared plans to launch new features that will enable them to receive and liquidate the $BERA needed for node operation while running nodes and distributing profits.

The best example of effectively utilizing the Infrared feature is Kodiak's Island Pool, which we have also briefly introduced in the DEX field above. After the mainnet launch, the Infrared plan to launch Kodiak's Island Pool ) has been operating on the testnet (, allowing users to use Kodiak's CLAMM for more efficient $iBGT farming, and the received $iBGT can be re-staked in Infrared or re-deposited into Kodiak's $iBGT/$BERA Island Pool for more $iBGT farming. Of course, users can also choose other gameplay options within the ecosystem.

Due to the interconnectivity of the protocol and effective ecological gameplay, Infrared has attracted the attention of many users and is currently receiving the most $BGT delegation on 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 the voting rights for the $BGT it holds will be provided.

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) 3.2. 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 in BeraPaw, 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 reward income generated by 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. 1### receives rewards and 2) votes for the $BGT emission pool. Through this structure, users and protocols voting for $BGT Emission using the $PAW token 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 ready to officially launch on Berachain. Although these protocols not only allow for more derivative products but also provide users with more ways to play, they also make the ecosystem more complex. In the Berachain network, the power and status of nodes will be proportional to the amount of $BGT delegated, and the liquidity staking protocols that provide $BGT liquidation functions are expected to be adopted by many users and protocols, becoming core infrastructure.

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Lending

Berachain also has a native lending protocol BEND, which offers the following features:

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

• Deposit $HONEY

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

Through this structure, BEND strengthens Berachain's triple token economic structure, generating basic interest for $HONEY, while increasing lending demand through $BGT, enriching the ecosystem's liquidity. Users can also execute $BGT leveraged Farming by repeatedly swapping borrowed $HONEY back to $WETH, $WBTC and depositing into BEND.

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