On September 26, Berachain officially announced the launch of the Request For Broposal (RFB) incentive program. This initiative aims to provide liquidity support to projects and testnet developers within the Berachain ecosystem, facilitating the cold start of these projects.
According to the announcement, projects that have already been deployed on the Berachain testnet can apply to participate in the RFB program until October 9, with the opportunity to join the Boyco project simultaneously. The Boyco project connects with the Royco Protocol, allowing project teams to directly access liquidity support from Berachain, enabling them to focus more on project development and community operations. This incentive mechanism offers developers a valuable opportunity for accelerated ecosystem building.
01 Major Challenges Facing DeFi
In the DeFi space, many projects encounter significant challenges that often hinder their growth potential.
Firstly, the cold start problem remains a major obstacle for most emerging applications. Many DeFi platforms struggle to attract users for trading when they launch due to a lack of liquidity, making it difficult for projects to gain initial traction.
Additionally, the centralization of liquidity supply is a prominent issue. Many applications rely heavily on a small number of high-net-worth investors and market makers (MMs) to provide liquidity, which not only exacerbates liquidity inequality but also greatly reduces participation opportunities for regular users.
Furthermore, many applications implement complex points and reward mechanisms to incentivize users, but these systems often lack transparency. Users frequently find it hard to understand the actual value of the points, leading to a gap between expectations and actual returns, which in turn affects user trust.
Finally, high transaction fees and network congestion issues persist on many chains, making small transactions economically unfeasible and limiting widespread user participation.
02 Boyco Protocol Ensures Adequate Liquidity
In response to these challenges, Berachain has launched the Boyco Protocol, which simplifies the liquidity acquisition process and enhances transparency. The key components of this protocol are as follows:
Pre-launch Liquidity Market: The Boyco Protocol allows applications to create pre-launch liquidity markets, enabling users to deposit funds into upcoming dApps before the Berachain mainnet officially goes live. This ensures that applications have sufficient capital to support their operations upon launch.
Liquidity Incentive Negotiation: In the Boyco market, applications can negotiate directly with liquidity providers (LPs) to secure the necessary liquidity from day one. For instance, an LP might express an intention like, "I will provide $10 million in liquidity in exchange for 1,000 XYZ tokens." Applications can accept or negotiate based on market conditions. This mechanism not only reduces the cost of acquiring liquidity for applications but also allows users to choose suitable liquidity providers according to their needs.
Transparency and Trust: The Boyco Protocol emphasizes transparency, allowing users to clearly understand the liquidity status and expected returns of their deposits while enabling applications to effectively manage their cash flow. This transparency not only enhances user trust in the platform but also reduces risks associated with trust assumptions.
The Boyco protocol operates through a straightforward workflow.
First, market creation. The application establishes a liquidity market via Royco.org, defining the conditions for which user approvals are required. These conditions include the steps for bridging to Berachain and the requirements for depositing into the application’s smart contract.
Next, the incentive mechanism. The application can offer incentives to potential LPs in the market or accept intentions proposed by LPs. This process encourages cross-incentivization among multiple projects, enhancing the overall liquidity supply.
Asset locking. Once LPs submit their letters of intent, their assets are locked until they are deposited into the application’s smart contract. The terms and duration of the lock will be clearly communicated to users before the deposit, increasing transparency in fund usage.
Finally, liquidity assurance. After the Berachain mainnet launches, pre-deposits will be bridged and directly deposited into the application’s smart contract. This mechanism ensures that the application can smoothly acquire the required liquidity at launch.
The Boyco protocol not only simplifies the liquidity acquisition process but also fosters collaboration within the ecosystem. Through Boyco, applications can collaborate directly with LPs instead of competing for the same liquidity pool. This collaborative model enhances user experience and strengthens interactions among various projects in the ecosystem.
For instance, applications can jointly create multi-platform integrations to improve cross-chain trading efficiency. By sharing liquidity, multiple projects can offer more competitive trading fees, attracting more user participation.
In summary, the Boyco protocol addresses the cold start issue, enhances transparency, and promotes collaboration within the ecosystem. It not only provides ample liquidity assurance for applications but also offers users a better participation experience. With this mechanism in place, Berachain is poised to build a more open and efficient DeFi environment, driving the sustained development and prosperity of the entire ecosystem.
