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

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 the protocol. Currently, Berachain is conducting its second test network "bArtio Testnet" to address the issues discovered in the first test network.

As of January 2, according to the Berachain official website, 234 protocols have participated in the bArtio Testnet, and the cumulative number of wallets participating in testing the PoL mechanism has exceeded 2.38 million. Although it is still in the testnet phase, these figures indicate a strong market interest in Berachain and its ecosystem.

The founder of Berachain, Smokey The Bera, recently hinted in a tweet that "Q5 will happen before April," indicating that the mainnet is about to launch. This has attracted both new and old users to join the ecosystem.

However, participating in the Berachain ecosystem requires an understanding of its PoL mechanism. Before the mainnet launch, the 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 lower the barriers for user participation. We will discuss outstanding projects in each field and detail how each protocol utilizes the PoL mechanism.

DEX

Berachain has a native DEX called BEX, which will be launched on the mainnet as BeraSwap. BeraSwap will support smooth 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 convenient and efficient services and strategies to attract users and liquidity.

Kodiak

Kodiak is a DEX that stands out from the Berachain incubated project "Build a Bera". In addition to supporting Uniswap v2 style features for BEX, Kodiak also offers CLAMM functionality similar to Uniswap v3, allowing liquidity providers to set and concentrate liquidity within a specific range.

Users can provide liquidity within a narrow range through the CLAMM pool, allowing for more efficient farming of $BGT. Kodiak also offers the Island feature, which helps users automatically reset and balance the CLAMM range, reducing the hassle of managing liquidity supply positions. This feature utilizes BEX to rebalance liquidity, establishing a complementary rather than competitive relationship.

Kodiak standardizes CLAMM liquidity positions through the Island feature, enabling this LP token to be used in other protocols and promoting more flexible and diverse ecological gameplay.

Before the mainnet launch, Kodiak has collaborated with multiple projects within the Berachain ecosystem, establishing its position as a core infrastructure. It also operates its own Berachain validator node, and as of January 3rd, it has received the second highest BGT authorization in the bArtio Testnet.

Honeypot Finance

Honeypot Finance is a protocol that supports all aspects of the token lifecycle, including the following sub-protocols:

• Henlo DEX: A DEX specifically designed to protect users from MEV attacks, offering limit orders and Batch-A2MM features.

• Dreampad: A Launchpad protocol that provides incubation and financing opportunities for projects preparing to launch on Berachain.

• Pot2Pump: A platform that provides a safer environment for the issuance and trading of meme coins.

Honeypot Finance plans to operate as a validator after the mainnet launch, providing its governance token $HPOT as delegation rewards. The protocol utilizes accumulated $BGT to release to the $HPOT liquidity pool, enhancing the liquidity of $HPOT. It also plans to increase the token value by using node operation income to buy and burn $HPOT.

In addition to Kodiak and Honeypot Finance, there are other protocols advocating efficient and convenient trading functions preparing for the Berachain mainnet, including BurrBear, OogaBooga, and Shogun.

Liquid Staking

Unlike typical PoS networks, the structure of Berachain allows liquidity providers to receive network rewards and liquidity provision interest calculated in $BGT when they deposit the liquidity tokens obtained from ecological protocols. Therefore, Berachain has essentially built liquidity staking into the network protocol.

However, existing protocols can only provide rewards and gain voting rights by collaborating with validators or by operating nodes independently to establish a self-sustaining flywheel model. In this context, Berachain's liquid staking protocol will provide a redemption feature for $BGT, making it easier for ecological protocols to adopt a structure that closely integrates the PoL mechanism.

Infrared

Infrared is a liquidity staking protocol co-incubated with Kodiak through Berachain's "Build a Bera" program.

The Infrared-operated repository can accept LP tokens from the liquidity pool, generating $BGT interest while running network nodes. When users deposit LP tokens, Infrared will use these tokens to generate $BGT, and users can receive $iBGT proportional to their deposited LP tokens.

Users can utilize $iBGT in the following ways:

• Staking in Infrared to receive rewards generated by the nodes.
• Use in other DeFi protocols
• Sell for profit

Infrared concentrates and distributes the rewards generated by the PoL mechanism to $iBGT stakers by turning $BGT into a liquid token, while also assisting other protocols in incorporating $iBGT into their systems. Infrared also plans to launch new features that allow them to receive and liquidate $BERA needed for node operations while running nodes and distributing profits.

Infrared currently accepts the most $BGT delegation in the bArtio Testnet. Many ecological projects have partnered with Infrared and plan to launch various derivatives, indicating that Infrared will become the most important infrastructure after the mainnet launch.

BeraPaw

BeraPaw is a liquidity staking protocol that operates a treasury between different nodes and registered liquidity pools, issuing $LBGT as the $BGT settlement token.

The governance token of BeraPaw is $PAW, and users can vote on which liquidity pools should receive $BGT using the $BGT held by BeraPaw. Node operators distribute the rewards generated from staking $BGT to $LBGT holders 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 using the $PAW token for $BGT Emission voting can exercise more voting power with relatively less capital.

Lending

Berachain has a native lending protocol BEND, which provides the following functions:

• 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 will generate $BGT rewards when borrowing $HONEY.

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

BeraBorrow

BeraBorrow is an over-collateralized stablecoin issuance protocol that allows users to mint $NECT stablecoins. It enables ordinary assets such as $BERA, $HONEY, as well as BEX and Berps LP tokens and Infrared's $iBGT to be used as collateral assets.

BeraBorrow has a governance token $POLLEN in addition to $NECT, which can serve as an incentive token in the following aspects:

• Used to reward liquidity pools that obtain $BGT Emission
• Encourage collateral deposits into the liquidity pool for up to $NECT debt.
• Distributed as rewards to depositors of the liquidity stability pool

Depositing LP coins into BeraBorrow will automatically deposit into Infrared to generate $iBGT rewards and automatically redeposit into Infrared to generate compound interest. Users can borrow $NECT to provide liquidity in other protocols and redeposit the received LP coins back into BeraBorrow to establish leveraged positions.

Gummi

Gummi is a lending protocol incubated through "Build a Bera" that operates without the need for oracles, allowing anyone to create lending pools without restrictions. Gummi plans to utilize any assets from Berachain to offer users the ability to establish 100 times leverage positions.

Gummi has established partnerships with core infrastructures such as Infrared and Kodiak, and plans to support the leveraged farming position functionality for various LP tokens of $iBGT and Kodiak.

Derivative Agreement

Berachain will launch the native Perp DEX Berps, providing infrastructure alongside BEX and BEND. In Berps, users can use $HONEY to establish 100x leveraged positions on various assets, or deposit $HONEY to provide the liquidity needed for traders' positions, earning trading fees, funding fees, and $BGT as rewards.

SMILEE

SMILEE is an options protocol that enables the creation of hedging positions for DEX liquidity provision. The options created in SMILEE have a unique structure that can generate more profits during periods of high price volatility, creating an effect that is completely opposite to impermanent loss.

SMILEE offers three types of options positions:

• Bull: Bet on a significant price increase volatility
• Bear: Bet on a significant drop in price volatility
• Smile: The bet price fluctuates significantly upward or downward.

Users can provide liquidity for the option positions established by option traders and collect the option fees paid by the traders. SMILEE reduces the impermanent loss for liquidity providers by dynamically rebalancing the liquidity provision positions in real time.

Exponents

Exponents is a derivative protocol that implements non-liquidatable leveraged positions on all assets within the ecosystem through its self-developed inverse asset issuance protocol IBC (Inverse Bonding Curve).

IBC adopts a reverse Bonding Curve, where prices decrease as demand increases, and with more collateral assets deposited, the quantity of receivable assets will also increase.

Exponents uses the IBC mechanism to implement long and short positions for all assets without the need for oracles. The goal is to adjust the parameters of the IBC mechanism to make the slope of the Bonding Curve steeper, thereby providing leveraged positions without liquidation.

![Discussion on the Characteristics of the Berachain Ecosystem and Overview of Core Projects Before Coin Issuance](