Written by: DeSpread
Disclaimer: The contents of this report reflect the views of the respective authors and are for informational purposes only and do not constitute a recommendation to buy or sell tokens or use the protocol. Nothing in this report constitutes, and should not be construed as, investment advice.
Introduction
Berachain is a Layer 1 network featuring a PoL (Proof of Liquidity) consensus mechanism that aligns the interests of validators, liquidity providers, and protocols. Currently, Berachain is running its second testnet, “bArtio Testnet”, to address issues found 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 have participated in the bArtio Testnet, and the cumulative number of wallets participating in the testing of Berachain’s PoL mechanism has exceeded 2.38 million. Although it is only in the test network stage, these data show that the market is optimistic about Berachain and The attention paid to its ecology is quite high.
Smokey The Bera, the founder of Berachain, who has been pushing for “Mainnet launch in Q5” since the end of 2024, recently introduced Boyco through an X tweet, hinting that “Q5 will happen before April,” indicating that the mainnet launch is imminent. This also attracted new and old users of Berachain to join the ecosystem.
However, to participate in the Berachain ecosystem, one must understand their PoL mechanism. Before the mainnet was launched, various complex financial products launched by protocols to gain an advantage in the PoL mechanism caused great inconvenience to new users. entry threshold.
This article aims to explore various areas of the Berachain ecosystem to effectively lower the threshold for user participation. We will discuss projects that have outstanding performance in each field and detail how each protocol utilizes the PoL mechanism.
DEX
Berachain has a native DEX called BEX, which will be launched as BeraSwap when the mainnet goes live. BeraSwap will support smooth liquidity transactions within the ecosystem and ensure the effective operation of the PoL mechanism. Given the existence of BEX, other DEXs that are preparing to be launched on Berachain are also preparing various more convenient and efficient services and strategies to attract users and liquidity in order to effectively compete with BEX.
2.1. Kodiak
Kodiak is a DEX that emerged from Berachain's incubation project "Build a Bera". In addition to supporting BEX’s Uniswap v2-style functionality (distributing liquidity evenly across the entire price range), Kodiak also provides Uniswap v3-like CLAMM (centralized liquidity automated market maker) functionality, allowing liquidity providers to set liquidity within a specific range. Stabilize and concentrate liquidity.
Users can farm $BGT more efficiently by providing liquidity in a narrow range through the CLAMM pool. In addition, Kodiak also provides an Island function to help users automatically reset and balance CLAMM ranges, reducing the hassle of managing liquidity supply positions. This feature leverages BEX to rebalance liquidity, thus creating a complementary rather than competitive relationship.
Not only that, due to the customizability of the liquidity range, the tokens of CLAMM liquidity positions are usually difficult to be used by other protocols, but Kodiak standardizes the user's CLAMM liquidity positions through the Island function, making the LP tokens also usable in other protocols. It can be used in the game to promote more flexible and diverse ecological gameplay.
Before the mainnet launch, Kodiak has already collaborated with many projects in the Berachain ecosystem to establish itself as a core infrastructure. They also operate their own Berachain node as a validator and, as of January 3, have received the second-highest BGT authorization in the bArtio Testnet.
2.2. Honeypot Finance
Honeypot Finance is a protocol that supports all aspects of the token lifecycle, from issuance to providing liquidity and efficient trading. It consists of the following sub-protocols:
Henlo DEX: A DEX that specifically protects users from MEV attacks, providing limit orders and Batch-A2MM functions that collect user orders within a specific period and execute them at the same price.
Dreampad: A launchpad protocol that provides incubation and funding opportunities for projects preparing to launch on Berachain while ensuring fair token launch and distribution.
Pot2Pump: A memecoin issuance platform that provides a safer memecoin issuance and trading environment, with features such as preventing robot sniping and refunding participating users if the 24-hour fundraising target is not reached.
Like Kodiak, Honeypot Finance also plans to operate as a validator after the mainnet launch, providing its governance token $HPOT as a delegation reward to users who delegate $BGT.
In addition, Honeypot Finance uses the accumulated $BGT to release it to the $HPOT liquidity pool, thereby enhancing the liquidity of $HPOT. The protocol also plans to increase the value of tokens by using node operation income to purchase and burn $HPOT, retaining the value of rewards paid to $BGT delegators and further consolidating the liquidity of $HPOT.
In addition to the above-mentioned Kodiak and Honeypot Finance, there are other protocols that promote efficient and convenient trading functions in preparation for the Berachain mainnet, including supporting capital-efficient trading by aggregating more than three similarly priced underlying assets (similar to Curve Finance). BurrBear, liquidity aggregator OogaBooga, and cross-chain abstract transaction protocol Shogun.
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 native tokens, ordinary users who do not operate nodes will not be able to obtain network rewards.
To solve this problem, the Liquidity Staking Protocol distributes rewards by accepting stakes of native tokens and entrusting node operations, allowing ordinary 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, the liquidity staking protocol has also become the core infrastructure of the PoS network.
In contrast, although Berachain’s node operation requires 69,420 $BERA, its structure is that when liquidity providers deposit liquidity tokens obtained from the ecological protocol into Berachain, they will receive a network value calculated in $BGT Road rewards and liquidity providing interest. Therefore, apart from the differences in method and sequence, Berachain has basically built liquidity staking into the network protocol.
Although Berachain requires 250,000 $BERA to operate a node on the mainnet, Berachain is structured to distribute $BGT rewards and interest to liquidity providers. Therefore, in addition to the different methods and sequences, Berachain basically stakes liquidity. Built into the Internet protocol.
However, in Berachain, existing protocols can only provide rewards and obtain voting rights by cooperating with validators, or establish a self-sufficient flywheel model by operating their own nodes as demonstrated by Kodiak and Honeypot Finance. Launch its liquidity pool.
In this context, Berachain’s liquidity staking protocol will provide a redemption function for $BGT (the voting rights that determine Emission). This allows Berachain ecosystem projects to incorporate liquidation $BGT into their protocol mechanisms without the need to negotiate with validators or nodes. In other words, this makes it easier for ecological protocols to adopt structures that tightly integrate the PoL mechanism.
3.1. Infrared
Infrared is a liquidity staking protocol incubated jointly with Kodiak through Berachain’s “Build a Bera” program.
Infrared-operated repositories can accept LP tokens from liquidity pools, generate $BGT interest rates, and run network nodes at the same time. When users deposit LP tokens into these repositories, Infrared uses these tokens to generate $BGT, and users can claim $iBGT (liquidated $BGT) proportional to the LP tokens they deposited.
Users can utilize the $iBGT they receive in the following ways:
Stake in Infrared to receive rewards generated by the node
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 liquid tokens, while also helping other protocols in the Berachain ecosystem to incorporate $iBGT into their The agreement allows the platform to provide higher returns to their users. Additionally, Infrared plans to roll out new features that will allow them to receive and liquidate $BERA required to run their nodes while running their nodes and distributing profits.
The best example of effective use of Infrared functionality is Kodiak's Island Pool, which we also briefly introduced in the DEX field mentioned above. After the mainnet launch, Infrared plans to launch Kodiak's Island Pool (already running in testnet), allowing users to use Kodiak's CLAMM for more efficient $iBGT farming and transfer the received $iBGT to Infrared. Re-stake, or redeposit it into Kodiak's $iBGT/$BERA Island Pool for more $iBGT farming. Of course, users can also choose to play within other ecosystems.
Based on the interconnectivity of the protocol and effective ecological gameplay, Infrared has attracted the attention of many users and currently accepts the most $BGT delegations in the bArtio Testnet. In addition, many ecological projects have already cooperated with Infrared and plan to launch various derivative products, indicating that Infrared will become the most important infrastructure after the launch of the mainnet.
Meanwhile, explicit details about how Infrared will use delegation $BGT to select $BGT's Emission have yet to be made public. It will therefore be important to watch closely whether Infrared implements these processes in a decentralized manner and to whom they will provide voting rights for the $BGT they hold.
3.2. BeraPaw
BeraPaw is also a liquidity staking protocol, but they do not run their own nodes. Instead, they run vaults between different nodes and liquidity pools registered with BeraPaw, and issue $LBGT as $BGT liquidation tokens.
BeraPaw's governance token is $PAW, and users can use $BGT held by BeraPaw to vote on which liquidity pools should receive $BGT. Through this method, node operators distribute the reward income generated by staking $BGT to the holders of $LBGT.
BeraPaw uses a structure that splits the use of $BGT tokens into $LBGT and $PAW tokens, 1) receiving rewards and 2) voting for $BGT emission pools. Through this structure, users and protocols that use $PAW tokens for $BGT Emission voting 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 liquidity staking protocols that are ready to be officially launched on Berachain. Although these protocols not only allow more derivative products but also allow users to have more gameplay, 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 protocol that provides $BGT clearing function is expected to be adopted by many users and protocols and become core infrastructure.
Borrowing and Loaning
Berachain also has a native lending protocol, BEND, which provides the following features:
Use $WBTC, $WETH as collateral to borrow $HONEY
Deposit $HONEY
Unlike typical lending protocols, BEND has two notable features: 1) $HONEY cannot be used as collateral, 2) $WBTC and $WETH deposits do not generate interest, but will generate $BGT when borrowing $HONEY award.
Through this structure, BEND strengthens Berachain's triple token economic structure, generating basic interest for $HONEY, while increasing lending demand through $BGT and enriching the liquidity of the ecosystem. Users can also perform $BGT leveraged farming by repeatedly exchanging the borrowed $HONEY for $WETH, $WBTC and depositing them into BEND.
Next, we will explore in detail several major lending protocols that are about to be launched on Berachain and the functions provided by each platform.
4.1. BeraBorrow
BeraBorrow is an over-collateralized stablecoin issuance protocol that allows users to mint $NECT stablecoins. It not only allows common assets like $BERA and $HONEY, but also allows BEX and Berps LP tokens and Infrared’s $iBGT as collateral assets. $NECT minted with collateralized assets can be deposited in BeraBorrow's liquidity stabilization pool, and depositors can collect borrowing fees and liquidation fees from $NECT borrowers, establishing a structure that supports $NECT's basic needs.
In addition to $NECT, BeraBorrow also has a governance token $POLLEN, which can be used as an incentive token in the following aspects:
Liquidity pool for rewards $BGT Emission
Encourage collateral deposits to the highest $NECT Debt liquidity pool
As rewards distributed to depositors in the liquidity stable pool
In addition to this basic structure, LP tokens deposited in BeraBorrow are automatically deposited in Infrared to generate $iBGT rewards, and automatically redeposited in Infrared to generate compound interest. Users can borrow $NECT to provide liquidity in other protocols and deposit the received LP tokens back into BeraBorrow to establish leveraged positions.
In addition, BeraBorrow also plans to allocate $BGT to the DEX liquidity pool for $NECT and $iBGT transactions, strengthening the demand and market liquidity of $NECT, while providing high deposit returns for liquidity providers.
With the support of various demands, $NECT is expected to become the core native stablecoin in the Berachain ecosystem together with $HONEY.
4.2. Gummi
Gummi is a lending protocol incubated by "Build a Bera" that operates without an oracle, allowing anyone to establish a lending pool without restrictions. Using this framework, Gummi plans to provide users with 100x leverage positions using any asset on Berachain.
Before the mainnet launch, Gummi has reached partnerships with core infrastructure such as Infrared and Kodiak, and plans to support leveraged farming position functions for various LP tokens of $iBGT and Kodiak.
It can be seen that, unlike lending protocols in other networks that are mainly used for leverage and hedging positions of specific assets, Berachain's lending protocol can amplify the $BGT Emission of the PoL mechanism. Therefore, as more protocols are launched on Berachain and the ecosystem diversifies, the utility and demand for lending protocols are expected to increase, making it an important part of the ecosystem.
Derivative Agreements
Currently, various derivative protocols that utilize the PoL mechanism in different ways are also being prepared to be launched when Berachain goes online. The basic infrastructure includes Berps, the native Perp DEX that the Berachain team will launch along with BEX and BEND.
In Berps, users can use $HONEY to establish 100x leveraged positions on various assets, or deposit $HONEY to provide the liquidity required for traders' positions, and receive transaction fees, funding fees and $BGT in return. .
Through this structure, Berps gives $HONEY a clear use case as the base asset for Berachain’s native Perp DEX, while also providing a simple yet effective entry point for $BGT farming for those who find the PoL mechanism daunting. New users can also mine $BGT rewards by making a single token $HONEY deposit. Therefore, this protocol is expected to become the most critical protocol supporting Berachain’s triple token economy.
Next we take a look at some of the unique derivative protocols that are set to launch on Berachain.
5.1. SMILEE
SMILEE is an options protocol that can create hedging positions for DEX liquidity providers. Options created in SMILEE have a unique structure that can generate more profits when prices are more volatile, creating a completely different environment from uncompensated losses (IL, where liquidity providers incur greater losses when volatility is high). Opposite effect.
Users must pay a certain amount of option premium to establish option positions in SMILEE. There are three types of option positions to choose from:
Bull: A bet on a large upward price movement until expiration.
Bear: A bet on a significant downward price movement until expiration.
Smile: A bet that the price moves significantly upward or downward until expiration.
In addition to such options trading, users can also provide liquidity for option positions established by option traders and collect option premiums paid by traders. Although liquidity providers face uncompensated losses (IL) equal to the trader's profits, similar to providing liquidity to DEXs, SMILEE reduces liquidity providers' losses by rebalancing liquidity provision positions in real time when option trades occur. Free loss.
The Berachain Network Protocol expects to create liquidity pools on major DEXs (including the native dapp BEX) to increase the liquidity of its tokens and generate $BGT rewards for these pools. In this environment, we can estimate that liquidity providers and protocols mining $BGT will widely use SMILEE as a hedging tool for LP positions. In addition, if SMILEE's option positions start to gain $BGT Emission in the future, SMILEE's position in the Berachain ecosystem will become more stable.
5.2. Exponents
Exponents is another derivative protocol that uses its self-developed reverse asset issuance protocol IBC (Inverse Bonding Curve) to achieve leveraged space that will not be liquidated on all assets within the ecosystem.
IBC adopts a reverse bonding curve, which is opposite to the general concept of bonding curve. Bonding Curve is a price discovery mechanism recently adopted by many memecoin launchpads such as Pump.fun. Traditional Bonding Curve achieves price increase by reducing the amount of assets required and as more collateral assets are deposited into the liquidity pool; while IBC achieves the opposite, as demand increases, the price will also increase. Decrease, and because more collateral assets are deposited, the amount of receivables will also increase.
Exponents uses the IBC mechanism to implement long and short positions of all assets without the need for an oracle. Its purpose is to provide liquidation-free leverage positions by adjusting the IBC mechanism parameters to make the slope of the Bonding Curve steeper.
In addition, IBC also has the function of staking synthetic assets issued in the protocol and distributing the profits generated by the protocol. When combined with Berachain's PoL mechanism, $BGT Emission can be distributed as a reward to users who issue assets through IBC. In other words, by using $BGT as a reward, users are encouraged to establish short positions on competing protocol tokens, thereby achieving more diversified ecological gameplay.
In addition to SMILEE and Exponents discussed above, various derivatives protocols are also preparing to launch on Berachain, including IVX, which allows short-term, high-leverage positions to be established at low cost through the 0-DTE function, and Polarity, which provides loans with options as collateral. Finance. Compared with derivatives in other network ecosystems, each derivative is more diverse and complex. Some protocols complement Berachain's PoL mechanism, while others use this mechanism to highlight their unique advantages.
other
So far, we have explored several protocols that serve as basic infrastructure in the blockchain ecosystem (including DEX, liquidity staking, lending, and derivatives protocols, etc.), and discussed how these projects highlight their unique advantages. Use PoL mechanism.
However, in addition to the DeFi track introduced so far, various types of projects are also preparing to be launched on Berachain. Some of these projects adopt Berachain’s unique structure and actively use the PoL mechanism, while others only achieve a high degree of synergy with the ecosystem and do not directly use the mechanism; some projects also flaunt concepts that are consistent with Berachain’s cultural code. Features to attract users' interest and attention.
Next, we will introduce these more distinctive projects that will be launched on Berachain.
6.1. Goldilocks
Goldilocks is a DAO and platform that develops Berachain’s exclusive DeFi infrastructure, which consists of the following sub-protocols:
Goldiswap: Contains the FSL pool (Floor Supporting Liquidity Pool) that guarantees a minimum floor price for the Goldilocks governance token $LOCKS, and the PSL pool (Price Supporting Liquidity Pool) for exchanging $HONEY and $LOCKS. The structure uses $LOCKS fees generated from trading in the PSL pool to continuously increase the floor price of $LOCKS. Users can get $PORRIDGE as a reward by using $LOCKS as collateral, and $PORRIDGE gives users the right to buy $LOCKS at the lowest price. Users can use $LOCKS as collateral to borrow $HONEY.
Goldilend: NFT collateral lending protocol for Berachain ecosystem NFTs.
Goldivaults: Generate interest using time-locked assets stored in the Berachain ecosystem DeFi protocol. Depositors receive OT (Ownership Tokens), which give the right to claim the principal upon maturity, and YT (Yield Tokens), which give the right to claim the interest accrued. This allows users to trade against future interest income, providing functionality similar to Ethereum’s Pendle Finance. (For more information on this feature, please refer to the article "Pendle Finance - Discover Untapped Trading Markets").
Therefore, Goldilocks provides Berachain optimized services in the Berachain ecosystem, such as NFT collateral lending and interest trading functions. Compared with other networks, protocol-issued NFTs and liquidity provision play a more important role. In addition, Goldilocks expects to gradually secure more users and liquidity through a gradual increase in the price structure of the platform token and lending services utilizing this token.
At the same time, Pendle Finance has also become the core DeFi protocol adopted by many projects in the current Ethereum ecosystem, distributing protocol points through YT for liquidity deposits, thereby promoting its airdrop activities. Likewise, it will be interesting to see whether Goldilocks can gain dominance in Berachain by collaborating with other projects in the Berachain ecosystem that are preparing for token issuance to create various types of Goldivaults.
6.2. Beradrome
Beradrome is a protocol that pools user liquidity tokens and distributes the profits generated as well as rewards negotiated with other protocols to users. Beradrome uses the following three native tokens to allow users to internalize the profits generated in Beradrome back into the protocol:
$oBERO: Tokens rewarded to users who deposit liquidity tokens in Beradrome. By burning $oBERO, users can obtain voting rights for the reward emission rate of $oBERA in the liquidity pool, or deposit $HONEY in Beradrome equivalent to the amount burned $oBERO to mint and obtain $BERO.
$BERO: Beradrome’s main token. Since the deposited $HONEY is obtained by burning it together with $oBERO during the minting process, its value is guaranteed to remain above 1 $HONEY.
$hiBERO: Beradrome's governance token, which can be obtained by staking $BERO. $BGT held by Beradrome can be used to vote on which liquidity pools should receive $oBERO and receive profits generated by the protocol. It is also possible to borrow $HONEY using the pledged $hiBERO as collateral.
Therefore, Beradrome encourages the internalization of rewards generated within the protocol by using $oBERO’s $BERO minting mechanism, keeping the price of $BERO and $hiBERO above $1, while providing $hiBERO holders with Liquidation-free lending opportunities for $HONEY deposited during the $BERO minting process. This will continue to attract external liquidity into the protocol, encourage more protocols to develop liquidity through Beradrome, and establish a self-sustaining flywheel that redistributes the rewards it provides to users.
In addition, Beradrme plans to operate its own nodes, obtain $BGT Emission voting rights by accepting external $BGT delegations, separate it from its protocol operation mechanism, and distribute $BGT to the $hiBERO casting pool. If this plan is successful in the future, $hiBERO holders will be able to obtain both Beradrome’s profits and $BGT, which may attract more liquidity to the Beradrome ecosystem.
6.3. Yeet
Yeet is an on-chain betting game protocol using $BERA. Anyone can participate in the game by betting $BERA (approximately 0.5% higher than the previous depositor's $BERA) in Yeet's liquidity pool during the set game time, and the last deposited $BERA The user takes 80% of the total deposits $BERA in the liquidity pool.
Even if users do not win the game, they can receive Yeet's native token $YEET as a reward proportional to their betting amount. Users can stake the received $YEET into Yeet's Liquidity Trifecta Vault to earn betting interest.
Liquidity Trifecta Vault takes 9% of the $BERA deposited by users and $YEET bets made in the game. The vault will use the deposited assets to provide liquidity to Kodiak, and will redeposit the liquidity tokens received from Kodiak into Beradrome to maximize the interest paid to a given investor.
Additionally, Yeet plans to launch the YeetBond feature, which will allow users to claim bonds in specific tokens at a discount to the market price at maturity. On Berachain, there are various ways to use liquidity to create future value, and this functionality provided by YeetBond is expected to be actively utilized by various protocols as a means of ensuring liquidity.
Therefore, Yeet plans to provide Berachain with optimized "interesting functions" and "effective functions" at the same time. Starting from the test network stage, it will build a solid community centered on its unique joyful and humorous memes, including |_202411112023114_ | Yeetard NFTs with reward-boosting functionality.
6.4. Ramen
Ramen is a Launchpad protocol, similar to Honeypot Finance’s Dreampad, that helps new protocols ready to launch on Berachain to raise funds securely through fair token sales. The platform supports two Launchpad modes:
Fixed Price Model: A method of purchasing tokens at a fixed price. Users must register on the whitelist to participate in the issuance platform, or stake the platform’s native token $RAMEN to obtain Gacha tickets, and consume these tickets to win in the draw.
Price Discovery Model: Unlike the Fixed Price Model, anyone can participate. Users who wish to purchase an amount of deposited assets equal to their desired token price* place blind bids to determine the settlement price. The right to purchase tokens at the settlement price is granted starting with the user with the highest bid.
In addition to the Launchpad feature, Ramen also plans to launch an Airdrop Recipes feature that will make it easy to set and execute token airdrop criteria. Ramen provides all necessary functions from token issuance to sales and distribution, and aims to become the core infrastructure adopted by many new projects after the launch of Berachain mainnet.
However, in order for Ramen to maintain user interest, there must be a certain level of protocol dependency, and there needs to be a way for projects selling tokens through Ramen to operate successfully and provide profits for token buyers. Therefore, it is necessary for us to continue to observe the long-term growth of projects that conduct token sales through Ramen, and whether potential projects choose to use the Ramen issuance platform.
6.5. PuffPaw
PuffPaw is a Vape 2 Earn project where users can earn tokens by vaping. It measures users' smoking activity through self-produced smoking devices and e-liquid cartridges, and rewards higher $VAPE tokens for e-liquids with lower nicotine content to encourage smoking cessation.
Additionally, through its Leasing-Borrowing program, users who do not want to smoke but want to participate in the program can also lend their devices to users who are unable to purchase the devices and share in the profits, creating a structure that can attract Berachain ecosystem users regardless of whether they smoke or not.
In December 2023, PuffPaw successfully sold out its PUFF PASS NFT as a ticket to participate in the project, and plans to sell additional devices to strengthen its Vape brand image and expand its ecosystem. In addition, the company plans to generate additional revenue by providing data on user device usage to AI companies and insurance companies, using this revenue to support the value of $VAPE provided as rewards, and also plans to establish a PoL mechanism to provide $VAPE A way for holders to generate additional income.
Reading this, we have examined the protocols representing various tracks on Berachain, each with its own unique advantages. In addition, there are other projects that do not require understanding of Berachain’s liquidity mechanism to participate:
Beratone: Life simulation, role-playing game
Junky Ursas: GambleFi Platform
Fable: Decentralized Media/Gaming Platform
Onikuma: SocialFi Platform on Chain
In addition, various Vault/On-chain fund protocols such as Dirac Finance, NAV, and D2 will also be launched one after another. By combining the functions of the Berachain protocol, various DeFi strategies in the ecosystem are simplified, allowing new users to easily participate in the application. Gain profits with easy risk management.
These protocols can not only encourage more users to join the Berachain ecosystem to increase the liquidity of the overall ecosystem, but also promote the use of the ecosystem.
Community
The structure adopted by most of the Berachain ecosystem protocols is to distribute high returns to liquidity providers to obtain initial liquidity, actively utilize the PoL mechanism, and use NFT and Memes to build communities as a further strengthening and means of expanding these structures.
Since the PoL mechanism allows users who hold more $BGT and liquidity in the ecosystem to have higher negotiation rights and more opportunities to obtain incentives, some projects have the strategy of first forming communities with NFTs and Memes, and then Various community activities build reputation and status, and then generate and distribute profits, but these projects do not necessarily provide specific functions in the protocol.
7.1. The Honey JAR
The Honey Jar is a community united by a core concept, using a community-driven flywheel to build sticky liquidity, and developed in 2023 around an NFT called Honeycomb.
The Honey Jar community is expanding in a similar way to how Berachain grew, by issuing and distributing Honeycomb’s derivative NFT series to holders. On the basis of community expansion, it cooperates with various projects developed within the Berachain ecosystem to provide various benefits of these projects to NFT holders, thereby consolidating its position.
Subsequently, The Honey Jar produced various Berachain-related educational materials and provided various useful services such as the testnet Faucet for users who are new to the Berachain ecosystem. In addition, The Honey Jar is also a venture capital studio in the Berachain ecosystem, incubating S&P (Standard & Paws), a community-based evaluation service for evaluating Berachain ecosystem projects, and Bera Infinity, a platform for measuring and rewarding contributions to the Berachain ecosystem.
According to Honey Jar's Ecosystem Explorer, as of January 11, Honey Jar has directly participated in or has a partnership with 89 projects, which has established Honey Jar's position as the most influential core community in the current Berachain ecosystem. In addition, users who hold Honeycomb NFTs will also receive NFT whitelists and token airdrop opportunities from numerous partner projects, making Honeycomb the NFT series that maintains the highest reserve price of 0.6 ETH in the Berachain NFT ecosystem outside of Bong Bears and Rebase NFTs.
In the current bArtio Testnet, the nodes operated by Honey Jar have the third highest representation, second only to the nodes operated by Infrared and Kodiak. We can also see that the next rankings are all community-centric projects, including Beraland, which provides Berachain-related information in the podcast, and TTT, which provides teaching materials and operates nodes for Vietnamese users. Both are second only to Honey Jar in terms of Projects with the most $BGT representation.
Through these data, we can understand that in the current Berachain ecosystem, taking the community as the center to gain advantages in the PoL mechanism is an effective strategy.
in conclusion
Above, we explored how the infrastructure protocols of the Berachain ecosystem (such as DEX, liquidity staking, and lending protocols) combine various functions to create complex financial services. We also learned from some examples of ecological projects how different protocols use Berachain's PoL mechanism and unique community culture to attract user interest and liquidity with "high returns" and "entertainment".
At the same time, Berachain also recently announced that it will support the issuance of tokens and initial ecosystem liquidity through the Boyco, RFA (Request for Application) and RFC (Request for Community) programs, suggesting that the mainnet will be launched soon.
Boyco: A liquidity platform before the mainnet launch, allowing protocols planned to be deployed on Berachain to negotiate liquidity and future reward distribution plans with liquidity providers in advance in a transparent environment.
RFA (Request for Application), RFC (Request for Community): After the Berachain mainnet is launched, a plan to allocate $BERA tokens to projects that actively develop or build communities within the ecosystem. The selected RFAs and RFCs will continue to contribute to the ecosystem by using the allocated tokens to promote initial ecosystem activities and liquidity activities by distributing them to ecosystem users.
From these plans, it can be inferred that Berachain will show rapid growth after the launch of the mainnet, so users who plan to participate in the early ecosystem can pay close attention to the trends of RFA and RFC projects to formulate their strategies for participating in the ecosystem.
Currently, Pre-Boyco vaults operated by protocols such as Stakestone, Ether.fi and Ethena, as well as the Boyco vault launched on January 28, have received 2% of the initial $BERA token supply. As of January 31, the total accumulated deposits in these vaults have reached US$2.35 billion. If this liquidity is directly used by the ecological protocol after the mainnet is launched, Berachain's TVL will be higher than Sui, which is currently ranked 8th in TVL.
As the end date of Boyco approaches on February 3, users are expected to deposit funds into high-yield vaults in the final days, promoting further growth in total TVL. Furthermore, given that Berachain’s PoL structure encourages liquidity inflows and returns the resulting profits to the network, we estimate that the network’s TVL will also increase significantly from current figures after the mainnet launch.
However, we cannot say with certainty that this ecosystem-first rewards structure, and attempts to enforce it through Boyco and RFA/RFC, will perfectly guarantee the long-term sustainability of Berachain. Nevertheless, the successful ecosystem and community case of Berachain before the official launch of the mainnet is quite rare in the blockchain industry, so it will definitely become an important reference case for projects to be launched in the future.
