Discussion on the Characteristics of Berachain Ecosystem and Overview of Core Projects Before Coin Issuance

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. The second test network, "bArtio Testnet," is currently underway to address the issues discovered in the first test network.

Many ecological protocols have already been deployed on the bArtio Testnet version. As of January 2nd, 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 testing Berachain's PoL mechanism has exceeded 2.38 million. Although it is only in the test network 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, announced the "Q5 mainnet launch" through a recent X tweet introducing Boyco, hinting that "Q5 will happen before April" and indicating that the mainnet launch is imminent. This has also attracted 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, various complex financial products introduced by the protocols to gain an advantage in the PoL mechanism have instead created a significant entry barrier 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 have outstanding performance 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 when the mainnet goes live. BeraSwap will support smooth liquidity trading within the ecosystem and ensure the effective operation of the PoL mechanism. In light of BEX's existence, other DEXs preparing to launch on Berachain are also gearing up with 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 style features, which average liquidity distribution across the entire price range (, Kodiak also offers a CLAMM ) concentrated liquidity automated market maker ( function, 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 that helps users automatically reset and balance the CLAMM range, reducing the hassle of managing liquidity supply positions. This function utilizes 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 these LP tokens 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 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, and is composed 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 fair token issuance and distribution.

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

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 the 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 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 also other protocols advocating for efficient and convenient trading features 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 (, the liquidity aggregator OogaBooga, and the 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 coin authorization structure, general users who do not operate nodes cannot receive network rewards.

To solve this problem, liquidity staking protocols distribute rewards by accepting the staking of native tokens and operating delegated nodes, 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 enhancing 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 nodes in Berachain 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 the ecological protocol into Berachain. Therefore, aside from the different methods and sequences, Berachain has essentially built liquidity staking into its network protocol.

Although the operation of nodes on the Berachain mainnet requires 250,000 $BERA, the structure of Berachain is designed to distribute $BGT rewards and interest to liquidity providers. Therefore, apart 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 by establishing a self-sustaining flywheel model to kickstart their liquidity pools, as demonstrated by Kodiak and Honeypot Finance through operating their respective nodes.

In this context, Berachain's liquid staking protocol will provide $BGT) the 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.

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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 vault can accept LP tokens from the liquidity pool, 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###, which is proportional to their deposited LP tokens, along with the settled $BGT(.

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 centralizes and distributes the rewards generated by the PoL mechanism to fewer $iBGT stakers by making $BGT a liquid token. This also helps other protocols in the Berachain ecosystem incorporate $iBGT into their protocols, allowing their platforms to provide higher returns for their users. In addition, Infrared plans to launch new features that will allow them to receive and settle the $BERA needed for running nodes while distributing profits.

The best example of effectively utilizing the Infrared feature is Kodiak's Island Pool, which we also briefly introduced in the aforementioned DEX field. After the mainnet launch, the Infrared plan to launch Kodiak's Island Pool ) has been operational 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 re-deposited into Kodiak's $iBGT/$BERA Island Pool for more $iBGT farming. Of course, users can also choose other gameplay within the ecosystem.

Based on the interconnectivity of the protocol and effective ecological gameplay, Infrared has garnered significant attention from many users, currently accepting the most $BGT delegation in 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 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 of its held $BGT will be granted.

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) 3.2. BeraPaw

BeraPaw is also a liquidity staking protocol, but they do not operate their own nodes; instead, they run a treasury between different nodes and liquidity pools registered with BeraPaw, issuing $LBGT as the $BGT settlement token.

The governance token of BeraPaw is $PAW. Users can use the $BGT they hold in BeraPaw to vote on which liquidity pools should receive $BGT. Node operators distribute the rewards 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, where 1### receives rewards and 2) votes for the $BGT emission pool. Through this structure, users and protocols using the $PAW token to vote on $BGT Emission 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 about to be officially launched on Berachain. While these protocols not only allow for more derivative products but also provide users with more gameplay options, they also make the ecosystem more complex. In the Berachain network, the power and status of nodes will be proportional to the amount of delegated $BGT, 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, offering 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 generate interest, but will yield $BGT rewards when borrowing $HONEY.

Through this structure, BEND strengthens Berachain's triple token economic structure, generating basic interest for $HONEY while increasing borrowing demand through $BGT, enriching.