What is Berachain? Introduction to Bera token

1. What is Berachain? 

Berachain is a Layer 1 blockchain founded upon the Cosmos SDK framework, exhibits remarkable compatibility with the Ethereum Virtual Machine (EVM). Operated by the innovative Proof of Liquidity (POL) consensus mechanism, Berachain adeptly tackles two significant challenges: liquidity and network decentralization.

By amalgamating POL with CometBFT, a Cosmos SDK-based consensus tool, Berachain achieves accelerated transaction processing rates and reduced transaction fees. Additionally, Berachain's noteworthy compatibility with EVM facilitates the seamless transition of Ethereum developers' applications to the Berachain platform, requiring minimal adjustments.

2. Berachain ecosystem 

Berachain is actively constructing its own ecosystem by incorporating various components from diverse sectors, including:

DeFi: Beradrome, Aori, Honeypot Finance, etc.

These platforms within the DeFi space offer a range of decentralized financial services, such as lending, borrowing, and yield farming.

NFT: Bera Collective, Bera Punks, Beranames, etc.

The NFT sector on Berachain encompasses platforms dedicated to digital art, collectibles, and unique tokenized assets.

Gaming: Gamblino, Wizzwoods, BOINK, etc.

Gaming platforms on Berachain cater to gamers, offering decentralized games, virtual worlds, and opportunities for in-game asset ownership.

Infrastructure: Shogun, Infrared, Hyacinth, etc.

Infrastructure projects on Berachain provide essential tools and services for developers and users, facilitating network operation and scalability.

DAO: MijaniDao, Apiology DAO, notrealDAO, etc.

Decentralized Autonomous Organizations (DAOs) on Berachain enable community governance and decision-making, fostering decentralized control and collaboration.

By assembling these diverse elements into its ecosystem, Berachain aims to create a comprehensive and interconnected network that serves the needs of various industries and communities within the blockchain space.

3. How does Berachain work?

3.1. Proof of Liquidity

The Proof of Liquidity (POL) mechanism is devised to encourage users to provide liquidity on Berachain. Liquidity Providers (LPs) who contribute to liquidity pools of DeFi protocols on Berachain will receive rewards in the form of BGT tokens.

BGT is the sole token that users can stake to delegate to validators in order to generate blocks proportional to the amount of BGT they have delegated. Subsequently, validators can use BGT to vote on the inflation reward rate of BGT in the future for any liquidity pool on Berachain.

During the initial phase of operation, eligible pools are limited to a number of core protocols on Berachain such as BEX, Berps, Bend. However, Berachain will allow all smart contract liquidity pools from various protocols to be eligible for receiving BGT rewards when the POL mechanism stabilizes.

3.2. Polaris EVM

Polaris EVM stands as a modular Ethereum Virtual Machine (EVM) framework seamlessly integrated into the Cosmos ecosystem. Designed to enhance the capabilities of developers, Polaris EVM offers the ability to create state transition compilers and custom modules to develop more efficient and powerful smart contracts. This facilitates the development of applications on Berachain, making it more convenient and flexible for developers. 

By providing a comprehensive and adaptable framework, Polaris EVM empowers developers to leverage the functionalities of the Cosmos ecosystem while harnessing the full potential of Ethereum-compatible smart contracts on Berachain. Through its seamless integration and robust features, Polaris EVM contributes to the growth and advancement of decentralized applications within the Berachain ecosystem.

3.3. CometBFT

CometBFT serves as a consensus tool aimed at ensuring the safety of application replication and maintaining uniform transaction recording across all computing nodes. Its safety is contingent upon meeting two fundamental criteria:

• Failure Occurrence: CometBFT remains secure when fewer than one-third of computing nodes experience any form of malfunction.

• Consistency Preservation: Ensuring that all computing nodes possess access to identical transaction logs and compute identical states without access errors is pivotal for upholding consistency.

Moreover, CometBFT integrates an Application Blockchain Interface (ABCI), which facilitates the seamless delivery of transactions to applications for processing. In contrast to alternative consensus mechanisms with embedded state machines, CometBFT empowers developers to replicate the Byzantine Fault Tolerance (BFT) state of applications written in any programming language and development environment of their choice. This developer-friendly feature enhances its utility across a diverse range of decentralized applications.

3.4. Tri-Token 

Berachain implements a system called Tri-Token, comprising three tokens simultaneously active on the platform:

• BERA: This token serves as the transaction fee on Berachain.

• BGT: Acting as the governance token of Berachain, BGT follows the ERC-721 token standard (a standard for NFT tokens) and is non-transferable. Holders of BGT have the right to vote on Berachain's issues and receive additional rewards from platform transaction fees.

• HONEY: This is the stablecoin of Berachain, backed by user-staked assets.

The operation mechanism of these three tokens is as follows:

Users stake various tokens into "consensus" vaults and receive BERA tokens. Subsequently, users stake BERA to receive BGT tokens - the governance token of Berachain. BGT holders then have the authority to participate in platform governance, enjoy preferential borrowing rates for stablecoin HONEY, and receive additional rewards from platform transaction fees.

Users can utilize the staked token amount as collateral to borrow stablecoin HONEY. HONEY can be used for spot trading, derivatives, etc., with platforms implementing the vAMM mechanism on Berachain. Additionally, the staked tokens can be used to provide liquidity by pairing them with HONEY, thereby enhancing liquidity for the Berachain ecosystem, protecting the network from Sybil Attacks, and optimizing profits for users.

4. Team 

The development team of Berachain simultaneously serves as the development team for Bong Bears NFT. However, the members of the Berachain development team maintain anonymity on Twitter, adopting names and images associated with bears. For instance:

• Smokey The Bera: Co-founder of Berachain

• Dev Bear: Chief Technology Officer (CTO) at Berachain

5. Investors & Partners

Berachain accomplished a successful Series A funding round in April 2023, securing $42 million in investment, primarily led by Polychain Capital. Moreover, additional financial support was provided by various venture capital firms including Shima Capital, Hack VC, and Robot Ventures.

Furthermore, Berachain recently concluded another successful funding round in March 2024, raising $69 million and elevating the project's valuation to $1.5 billion. The principal investors leading this funding round for Berachain are Brevan Howard Digital and Framework Ventures.

6. Tokenomics

6.1. What is Bera token?

Berachain is constructed with three primary types of tokens:

• BERA: This token serves as the means for transaction fee payments, and all tokens used for transaction fees are subsequently burned. Additionally, BERA is characterized by an annual inflation rate of 10%.

• HONEY: Serving as the platform's stablecoin, HONEY is backed by assets staked on Berachain.

• BGT: As the network's governance token, BGT is designated as an NFT (ERC-721 Token) and is non-transferable. Holders of BGT possess the right to vote on Berachain's issues and receive additional rewards from platform transaction fees.

6.2. Bera token key metrics

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6.3. Bera token use cases

Staking Assets on Berachain:

Users have the option to stake a diverse range of assets within Berachain's ecosystem, allowing them to earn profits through their participation. Once assets are staked, users can leverage them as collateral to obtain HONEY, the stablecoin native to Berachain. HONEY can be utilized across various transactions, including spot trading, derivatives, and staking activities.

Reward Mechanism:

Staking assets within the consensus vault is incentivized through rewards in BERA, Berachain's primary token. This encourages users to actively participate in the network's consensus process, contributing to its overall security and stability. Additionally, the assets staked within the system can be utilized to provide liquidity by pairing them with HONEY. This strategy enhances liquidity within the ecosystem, safeguarding the network against liquidity shortages and optimizing profitability for users.

Utilizing BGT Governance Token:

Berachain introduces the governance token BGT, which can exclusively be obtained through staking BERA. Holding BGT grants users various privileges, including a share of transaction fees, interest on HONEY borrowing, and the ability to participate in project governance decisions. As a result, there is a growing demand for BGT ownership, incentivizing users to engage in BERA staking activities to acquire and hold BGT tokens.

7. E-wallet & exchange

7.1. E-wallet

As a blockchain built on the Cosmos ecosystem, Berachain offers multiple wallet options for users to securely store their tokens. These include Leap and Keplr wallets, which are specifically designed to interact with Cosmos-based blockchains like Berachain.

7.2. Exchanges

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8. Roadmap

• August 2021: Introduction of the Bong Bears NFT collection.

• December 2021: Release of the Baby Bears NFT collection.

• April 2022: Official launch of the Bit Bears NFT collection.

• April 21, 2022: Initiation of Berachain development.

• October 2022: Continued expansion of the Bong Bears collection with the introduction of two new collections named Bond Bears and Boo Bears.

• March 7, 2023: Introduction of Polaris - a framework facilitating Berachain compatibility with the EVM virtual machine.

9. Channels

• Website: https://berachain.com/

• Twitter: https://twitter.com/berachain

10. Conclusion

Through its innovative features and interoperable infrastructure, Berachain offers developers and users a seamless experience to interact with decentralized applications. The introduction of Bera token further enhances the ecosystem by providing essential utilities such as transaction settlements, governance participation, and incentivization mechanisms. As Berachain continues to evolve and expand its functionalities, it holds the promise of unlocking new opportunities and driving widespread adoption within the blockchain industry.