Discussion of Berachain's Ecological Features and Overview of Core Projects Before Issuing Coins

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 protocols. Currently, Berachain is conducting the second testnet "bArtio Testnet" to address the issues discovered 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 testing Berachain's PoL mechanism has exceeded 2.38 million. Although it is only in the testnet phase, these data show 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 launched by the protocols to gain an advantage in the PoL mechanism have created a significant entry barrier for new users.

This article aims to explore various fields of the Berachain ecosystem to effectively lower the barrier to user participation. We will discuss projects that have outstanding performances in various fields and detail how each protocol utilizes the PoL mechanism.

DEX

Berachain has a native DEX called BEX, which will launch on the mainnet as BeraSwap. BeraSwap will support seamless liquidity trading within the ecosystem and ensure the effective operation of the PoL mechanism. Given the presence 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 the Berachain incubation project "Build a Bera". In addition to supporting BEX with Uniswap v2-like features that average liquidity distribution 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 specific ranges.

Users can provide liquidity in a narrow range through the CLAMM pool to farm $BGT more effectively. Additionally, Kodiak offers an Island feature that helps users automatically reset and balance their CLAMM ranges, reducing the hassle of managing liquidity supply positions. This feature uses BEX to rebalance liquidity, thereby establishing a complementary rather than competitive relationship.

Not only that, due to the customizability of liquidity ranges, the tokens of CLAMM liquidity positions are often difficult to be used by other protocols. However, Kodiak standardizes users' CLAMM liquidity positions through the Island feature, allowing this LP token to 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 validation nodes, and as of January 3rd, 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 preparing to launch on Berachain, while ensuring a fair coin launch and distribution.

• Pot2Pump: A meme coin issuance platform that provides a safer environment for meme coin issuance and trading, featuring functionalities such as preventing bot sniping and refunding participating users in case the fundraising goal is not met within 24 hours.

Similar to Kodiak, Honeypot Finance also plans to operate as a validator after the mainnet launch, providing 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's value by using node operation income to buy and burn $HPOT, retaining the reward value paid to $BGT delegators, further consolidating the liquidity of $HPOT.

In addition to the aforementioned Kodiak and Honeypot Finance, there are other protocols advocating for efficient and convenient trading features preparing for the Berachain mainnet, including BurrBear, which supports capital-efficient trading by aggregating more than three underlying assets with similar prices (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 a native token authorization structure, general users who do not operate nodes will not be able to 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 much native tokens they hold, thereby increasing the liquidity of the ecosystem. Through these functions, liquidity staking protocols have also become the core infrastructure of PoS networks.

In contrast, although Berachain's node operation requires 69,420 $BERA, its structure allows liquidity providers to receive network rewards calculated in $BGT and liquidity provision interest when they deposit liquidity tokens obtained from ecosystem protocols into Berachain. Therefore, apart from the differences in methods and sequences, Berachain has essentially built liquidity staking into the network protocol.

Although Berachain requires 250,000 $BERA for node operation on the main network, its structure is designed to distribute $BGT rewards and interest to liquidity providers. Therefore, aside from the different methods and sequences, Berachain essentially incorporates liquidity staking into the network protocol.

However, in Berachain, existing protocols can only provide rewards and gain voting rights by collaborating with validators, or by operating their own nodes as demonstrated by Kodiak and Honeypot Finance 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 determine the Emission of $BGT### and the redemption feature of (. This allows Berachain ecosystem projects to incorporate the liquidated $BGT into their protocol mechanisms without the need 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.

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)# 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 the liquidity pools, generating $BGT interest rates while running network nodes. When users deposit LP tokens into these vaults, Infrared uses these tokens to generate $BGT, and users can claim $iBGT (liquidated $BGT) proportional to their deposited LP tokens.

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

• Stake in Infrared to receive rewards generated by the nodes

• Use in other DeFi protocols

• Sell for profit

Therefore, Infrared concentrates the rewards generated by the PoL mechanism and distributes them to fewer $iBGT stakers by turning $BGT into a liquid token, while also helping other protocols in the Berachain ecosystem to incorporate $iBGT into their protocols, allowing their platforms to offer higher returns to their users. In addition, Infrared also plans to launch new features that will allow 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 briefly introduced in the aforementioned DEX field. 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 restaked in Infrared or redeposited into Kodiak's $iBGT/$BERA Island Pool for more $iBGT farming. Of course, users can also choose other gameplay options within the ecosystem.

Based on the interconnectivity of the protocol and effective ecological gameplay, Infrared has garnered the attention of many users, currently accepting the most $BGT delegation on the bArtio Testnet. Additionally, many ecological projects have also partnered 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 $BGT's Emission have not been made public. Therefore, it will be quite important to closely monitor whether Infrared will implement these processes in a decentralized manner, as well as to whom the voting rights of the held $BGT will be granted.

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)# 3.2. BeraPaw

BeraPaw is also a liquid 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 settlement token for $BGT.

The governance token of BeraPaw is $PAW, and users can vote to determine which liquidity pools should receive $BGT using the $BGT held by 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. 1### receives rewards and 2) votes for the $BGT emission pool. Through this structure, users and protocols voting for $BGT Emission with $PAW tokens can exercise more voting rights 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 liquid staking protocols that are set to officially launch on Berachain. While these protocols not only allow for more derivatives but also provide users with more gameplay options, they also complicate the ecosystem further. In the Berachain network, the power and status of nodes will be proportional to the amount of delegated $BGT, and the liquid staking protocols that provide $BGT liquidation functionality are expected to be adopted by many users and protocols, becoming a 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 borrowing $HONEY will earn $BGT rewards.

Through this structure, BEND strengthens Berachain's tri-token economic model, generating basic interest for $HONEY while promoting