Exploring the Ecological Characteristics and Main Participants of Berachain.
Disclaimer: The content of this report reflects the views of the respective authors and is for reference only. It does not constitute advice for buying or selling tokens or using protocols. Nothing in this report constitutes investment advice and should not be understood as such.
This article does not cover the basic knowledge of Berachain. If you are learning about Berachain for the first time, it is recommended to first read "Exploring Berachain: Grasping Liquidity and Security in One Hand" before continuing with this article. The protocol links included in this article may be deleted or modified after the mainnet launch, so please exercise caution when accessing and using these links.
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. Currently, Berachain is conducting its second test network, "bArtio Testnet," to address issues identified in the first test network.
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 are participating in the bArtio Testnet, and the cumulative number of wallets testing Berachain's PoL mechanism has exceeded 2.38 million. Despite being in the test network phase, these figures indicate a high level of market interest in Berachain and its ecosystem.
bArtio Testnet Cumulative Wallet Trend; Source: bArtio Explorer
Starting from the end of 2024, Berachain founder Smokey The Bera recently introduced Boyco through an X tweet, hinting that "Q5 will happen before April," indicating that the mainnet launch is imminent. This has attracted both new and existing users to join the Berachain ecosystem.
However, to participate in the Berachain ecosystem, one must understand its PoL mechanism. Before the mainnet launch, the various complex financial products introduced by protocols to gain an advantage in the PoL mechanism have created a significant entry barrier for new users.
This article aims to explore various fields of the Berachain ecosystem to effectively lower the barriers to user participation. We will discuss projects that have performed outstandingly in various fields and detail how each protocol utilizes the PoL mechanism.
DEX
Berachain has a native DEX called BEX, which will launch as BeraSwap on the mainnet. BeraSwap will support smooth liquidity trading within the ecosystem and ensure the effective operation of the PoL mechanism. Given the existence of BEX, other DEXs preparing to launch on Berachain are also preparing various more convenient and efficient services and strategies to attract users and liquidity to effectively compete with BEX.
2.1. Kodiak
Kodiak is a DEX that has 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 offers a CLAMM (Concentrated Liquidity Automated Market Maker) feature similar to Uniswap v3, allowing liquidity providers to set and concentrate liquidity within a specific range.
Kodiak CLAMM Pool Deposit Interface; Source: Kodiak
Users can provide liquidity within a narrow range through the CLAMM pool to farm $BGT more effectively. Additionally, Kodiak offers an Island feature that helps users automatically reset and balance CLAMM ranges, reducing the hassle of managing liquidity supply positions. This feature utilizes BEX to rebalance liquidity, thus establishing a complementary rather than competitive relationship.
Moreover, due to the customizability of liquidity ranges, CLAMM liquidity position tokens 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 already collaborated with many projects in the Berachain ecosystem, establishing its position as a core infrastructure. They also operate their own Berachain node as a validator, and as of January 3, they 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 effective trading, composed of several sub-protocols:
Henlo DEX: A DEX specifically designed to protect users from MEV attacks, offering limit orders and Batch-A2MM functionality, which collects user orders within a specific period and executes 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 launches and distributions.
Pot2Pump: A meme coin sale platform that provides a safer environment for meme coin sales and trading, featuring functionalities to prevent bot sniping and refunding participating users if the 24-hour fundraising target is not met.
Like Kodiak, Honeypot Finance also plans to operate as a validator after the mainnet launch, offering its governance token $HPOT as a delegation reward to users who delegate $BGT.
Additionally, Honeypot Finance enhances the liquidity of $HPOT by releasing accumulated $BGT into the $HPOT liquidity pool. The protocol also plans to increase the token's value by using node operation income to buy and burn $HPOT, retaining the reward value paid to $BGT delegators, further solidifying $HPOT's liquidity.
In addition to the aforementioned Kodiak and Honeypot Finance, there are other protocols advocating for efficient and convenient trading functionalities preparing for the Berachain mainnet, including BurrBear, which supports capital-efficient trading by pooling three or more similarly priced underlying assets (similar to Curve Finance), liquidity aggregator OogaBooga, and cross-chain abstract trading 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 a native token authorization structure, general users who do not operate nodes cannot receive network rewards.
To address this issue, liquidity staking protocols distribute rewards by accepting the staking of native tokens and delegating node operations, 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 increasing liquidity in the ecosystem. Through these functions, liquidity staking protocols have become a core infrastructure of PoS networks.
In contrast, while Berachain's node operations require 69,420 $BERA, its structure allows liquidity providers to receive network rewards calculated in $BGT and interest on liquidity provided when they deposit liquidity tokens obtained from ecological protocols into Berachain. Therefore, aside from differences in methods and sequences, Berachain has essentially built liquidity staking into the network protocol.
In comparison, although Berachain's node operations on the mainnet require 250,000 $BERA, Berachain's structure distributes $BGT rewards and interest to liquidity providers. Thus, aside from differences in methods and sequences, Berachain has fundamentally integrated liquidity staking into the network protocol.
However, in Berachain, existing protocols can only provide rewards and gain voting rights by collaborating with validators or, as demonstrated by Kodiak and Honeypot Finance, by operating their own nodes to establish a self-sustaining flywheel model to kickstart their liquidity pools.
In this context, Berachain's liquidity staking protocol will provide a redemption function for $BGT (which determines Emission voting rights). This allows Berachain ecological projects to incorporate liquidated $BGT into their protocol mechanisms without needing to negotiate with validators or nodes. In other words, this makes it easier for ecological protocols to adopt a structure that closely integrates the PoL mechanism.
3.1. Infrared
Infrared is a liquidity staking protocol co-incubated with Kodiak through Berachain's "Build a Bera" program.
The repositories operated by Infrared can accept LP tokens from liquidity pools, generating $BGT interest while running network nodes. When users deposit LP tokens into these repositories, Infrared uses these tokens to generate $BGT, and users can claim $iBGT (liquidated $BGT) proportional to their deposited LP tokens.
Infrared Dashboard; Source: Infrared
Users can utilize the received $iBGT in the following ways:
Stake in Infrared to receive rewards generated by nodes
Use in other DeFi protocols
Sell for profit
Thus, Infrared centralizes and distributes the rewards generated by the PoL mechanism to fewer $iBGT stakers by turning $BGT into a liquid token, while also helping other protocols in the Berachain ecosystem incorporate $iBGT into their protocols, allowing their platforms to offer higher yields to their users. Additionally, Infrared plans to launch new features that will allow them to receive and liquidate the $BERA needed for node operations while running nodes and distributing profits.
A prime example of effectively utilizing Infrared's features is Kodiak's Island Pool, which we briefly introduced in the DEX section above. After the mainnet launch, Infrared plans to launch Kodiak's Island Pool (which is already operational in the testnet), allowing users to farm $iBGT more efficiently using Kodiak's CLAMM and re-stake the received $iBGT in Infrared or re-deposit it into Kodiak's $iBGT/$BERA Island Pool for further $iBGT farming. Of course, users can also choose other gameplay options within the ecosystem.
Based on the interconnectivity of the protocol and effective ecological gameplay, Infrared has garnered significant attention from users and currently accepts the most $BGT delegation in the bArtio Testnet. Furthermore, many ecological projects have already partnered with Infrared and plan to launch various derivative products, indicating that Infrared will become a crucial infrastructure after the mainnet launch.
Infrared Ecosystem Map; Source: Infrared Blog
Meanwhile, specific details on how Infrared will use delegated $BGT to select $BGT's Emission have not yet been disclosed. Therefore, closely monitoring whether Infrared will implement these processes in a decentralized manner and to whom it will provide voting rights for its held $BGT will be quite important.
3.2. BeraPaw
BeraPaw is also a liquidity staking protocol, but they do not operate their own nodes. Instead, they run vaults between different nodes and liquidity pools registered in BeraPaw, issuing $LBGT as the liquidated token for $BGT.
BeraPaw's governance token is $PAW, and users can use the $BGT held by BeraPaw to vote on which liquidity pools should receive $BGT. Node operators distribute the rewards generated from staking $BGT to $LBGT holders through this method.
BeraPaw Protocol Structure; Source: BeraPaw Docs
The structure adopted by BeraPaw divides the use of the $BGT token into two types of tokens: $LBGT and $PAW, 1) for receiving rewards and 2) for voting on $BGT emission pools. Through this structure, users and protocols voting for $BGT Emission using the $PAW token 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 preparing for official launch on Berachain. While these protocols not only allow for more derivative products but also provide users with more gameplay options, they also complicate the ecosystem further. In the Berachain network, the power and status of nodes will be proportional to the amount of delegated $BGT, and liquidity staking protocols that provide $BGT redemption functions are expected to be adopted by many users and protocols, becoming core infrastructure.
Lending
Berachain also has a native lending protocol BEND, offering the following features:
Use $WBTC, $WETH as collateral to borrow $HONEY
Deposit $HONEY
Unlike typical lending protocols, BEND has two notable characteristics: 1) $HONEY cannot be used as collateral, and 2) deposits of $WBTC and $WETH do not earn interest but generate $BGT rewards when borrowing $HONEY.
In BEND, $BGT can be claimed for borrowed $HONEY; Source: BEND
Through this structure, BEND strengthens Berachain's triple token economic structure, generating basic interest for $HONEY while increasing borrowing demand through $BGT, enriching the ecosystem's liquidity. Users can also execute $BGT leveraged farming by repeatedly exchanging borrowed $HONEY back to $WETH and $WBTC and depositing them into BEND.
Next, we will explore several major lending protocols preparing to launch on Berachain and the features offered by each platform.
4.1. BeraBorrow
BeraBorrow is an over-collateralized stablecoin issuance protocol that allows users to mint the $NECT stablecoin. It accepts not only common assets like $BERA and $HONEY but also BEX and Berps LP tokens, as well as Infrared's $iBGT as collateral assets. The $NECT minted against collateral can be deposited into BeraBorrow's liquidity stability pool, where depositors can collect borrowing fees and liquidation fees from $NECT borrowers, establishing a structure that supports the basic demand for $NECT.
Additionally, BeraBorrow has a governance token, $POLLEN, which serves as an incentive token in the following ways:
Rewards liquidity pools that earn $BGT Emission
Encourages collateral deposits to liquidity pools with high $NECT debt
Distributes rewards to depositors in the liquidity stability pool
Beyond this basic structure, LP tokens deposited into BeraBorrow are automatically deposited into Infrared to generate $iBGT rewards and are automatically re-deposited into Infrared to generate compound interest. Users can borrow $NECT to provide liquidity in other protocols and re-deposit the received LP tokens back into BeraBorrow to establish leveraged positions.
Furthermore, BeraBorrow plans to allocate $BGT to DEX liquidity pools for trading $NECT and $iBGT, enhancing the demand and market liquidity for $NECT while providing high deposit yields for liquidity providers.
BeraBorrow's Flywheel Structure; Source: BeraBorrow Docs
With support from various demand mechanisms, $NECT is expected to become a core native stablecoin in the Berachain ecosystem alongside $HONEY.
4.2. 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. Utilizing this architecture, Gummi plans to leverage any asset on Berachain to enable users to establish leveraged positions of up to 100 times.
Before the mainnet launch, Gummi has established partnerships with core infrastructures like Infrared and Kodiak and plans to support leveraged farming position functionalities for $iBGT and various LP tokens from Kodiak.
Thus, unlike lending protocols in other networks that primarily focus on specific assets for leverage and hedging positions, Berachain's lending protocols can amplify the $BGT Emission of the PoL mechanism. Therefore, as more protocols launch on Berachain and the ecosystem diversifies, the utility and demand for lending agreements are expected to increase, making them an important component of the ecosystem.
Derivative Protocols
Currently, various derivative protocols utilizing the PoL mechanism in different ways are also preparing to launch on Berachain. The basic infrastructure includes Berps, a native Perp DEX that the Berachain team will launch alongside BEX and BEND.
Berps Interface; Source: Berps
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 in return.
Through this structure, Berps gives $HONEY a clear use case as the underlying asset for Berachain's native Perp DEX while also providing a simple yet effective entry point for $BGT farming, allowing new users who find the PoL mechanism daunting to mine $BGT rewards through a single token deposit of $HONEY. Therefore, this protocol is expected to become one of the most critical protocols supporting Berachain's triple token economy.
Next, let's take a look at some unique derivative protocols preparing to launch on Berachain.
5.1. SMILEE
SMILEE is an options protocol capable of creating hedging positions for DEX liquidity providers. 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 (IL), which liquidity providers experience during high volatility.
Users must pay a certain premium to establish options positions in SMILEE, with three types of options positions available:
Bull: Bets on significant upward price volatility until expiration.
Bear: Bets on significant downward price volatility until expiration.
Smile: Bets on significant price volatility in either direction until expiration.
WBTC Smile Option Product; Source: Smilee
In addition to such options trading, users can provide liquidity for the options positions established by traders and collect the premiums paid by traders. While liquidity providers face impermanent loss (IL) equal to the traders' profits, similar to providing liquidity to a DEX, SMILEE reduces the impermanent loss for liquidity providers by dynamically rebalancing liquidity positions when options trading occurs.
The Berachain network protocol is expected to create liquidity pools on major DEXs (including the native dapp BEX) to enhance 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. Furthermore, if SMILEE's options positions begin to receive $BGT Emission in the future, SMILEE's position within the Berachain ecosystem will become even more solidified.
5.2. Exponents
Exponents is another 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 employs a reverse Bonding Curve, which is the opposite of the general concept of a Bonding Curve. A Bonding Curve is a price discovery mechanism recently adopted by many meme coin launchpads (such as Pump.fun). Traditional Bonding Curves achieve price increases by reducing the required amount of assets and increasing the price as more collateral assets are deposited into the liquidity pool; whereas IBC implements reverse assets, where prices decrease as demand increases, and the number of receivable assets also increases as more collateral assets are deposited.
IBC Graph; Source: IBC
Exponents uses the IBC mechanism to achieve long and short positions on all assets without the need for oracles, aiming to provide non-liquidatable leveraged positions by adjusting the parameters of the IBC mechanism to make the slope of the Bonding Curve steeper.
Additionally, IBC also includes functionalities for staking synthetic assets issued within the protocol and distributing profits generated by the protocol. When combined with Berachain's PoL mechanism, $BGT Emission can be distributed as rewards 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 enabling a more diverse ecological gameplay.
In addition to the previously discussed SMILEE and Exponents, various derivative protocols are also preparing to launch on Berachain, including IVX, which allows for the low-cost establishment of short-term high-leverage positions through 0-DTE functionality, and Polarity Finance, which offers loans secured by options. Compared to derivative tools in other network ecosystems, each derivative tool here is more diverse and complex, with some protocols complementing Berachain's PoL mechanism, while others leverage this mechanism to highlight their unique advantages.
Other
So far, we have explored several protocols that serve as fundamental infrastructure in the blockchain ecosystem (including DEX, liquidity staking, lending, and derivative protocols), discussing how these projects highlight their unique advantages by utilizing the PoL mechanism in Berachain.
However, beyond the DeFi track currently introduced, various types of projects are also preparing to launch on Berachain. Some of these projects adopt Berachain's unique structure and actively utilize the PoL mechanism, while others achieve a high degree of synergy with the ecosystem without directly employing the mechanism; there are also projects that claim to align with Berachain's cultural codes, each attracting user interest and attention with their unique features.
Next, we will introduce some distinctive projects that are set to launch on Berachain.
6.1. Goldilocks
Goldilocks is a DAO and platform developing a dedicated DeFi infrastructure for Berachain, consisting of the following sub-protocols:
- Goldiswap: Includes a Floor Supporting Liquidity Pool (FSL) that guarantees a minimum price for Goldilocks governance token $LOCKS, and a Price Supporting Liquidity Pool (PSL) used for exchanging $HONEY and $LOCKS. This structure continuously increases the floor price of $LOCKS through fees generated from trading in the PSL. Users can collateralize $LOCKS to earn $PORRIDGE as a reward, which grants them the right to purchase $LOCKS at the minimum price. Users can also use $LOCKS as collateral to borrow $HONEY.
Goldiswap Interface; Source: Goldilocks DAO
Goldilend: A lending protocol for NFT collateral in the Berachain ecosystem.
Goldivaults: Generates interest using time-locked assets stored in DeFi protocols within the Berachain ecosystem. Depositors receive OT (Ownership Tokens), which grant the right to claim principal at maturity, and YT (Yield Tokens), which grant the right to claim generated interest. This allows users to trade against future interest income, providing functionality similar to Ethereum's Pendle Finance. (For more details on this feature, see the article "Pendle Finance - Discovering Untapped Trading Markets").
Thus, Goldilocks provides Berachain-optimized services within the ecosystem, such as NFT collateral lending and interest trading functions, where the issuance of NFTs and liquidity provision plays a more significant role compared to other networks. Additionally, Goldilocks is expected to gradually ensure more users and liquidity through a platform token with a progressively increasing price structure and the utilization of this token's lending services.
At the same time, Pendle Finance has already become a core DeFi protocol adopted by many projects in the current Ethereum ecosystem, facilitating its airdrop activities through liquidity deposits distributed via YT. Similarly, whether Goldilocks can collaborate with other projects preparing for token issuance in the Berachain ecosystem to create various types of Goldivaults, thereby achieving dominance in Berachain, will be an interesting point of focus.
6.2. Beradrome
Beradrome is a protocol that aggregates user liquidity tokens, distributing the generated profits and rewards negotiated with other protocols to users. Beradrome employs the following three native tokens to internalize the profits generated within the protocol:
$oBERO: Tokens that reward users who deposit liquidity tokens in Beradrome. By burning $oBERO, users can gain voting rights on the reward emission rate of $oBERA in the liquidity pool or deposit an equivalent amount of $HONEY in Beradrome to mint and receive $BERO.
$BERO: The main token of Beradrome. Its value is guaranteed to remain above 1 $HONEY due to the burning of deposited $HONEY during the minting process alongside $oBERO.
$hiBERO: The governance token of Beradrome, which can be obtained by staking $BERO. Users can vote on which liquidity pools should receive $oBERO using the $BGT held by Beradrome and can also use staked $hiBERO as collateral to borrow $HONEY.
Therefore, Beradrome encourages the internalization of rewards generated within the protocol through the minting mechanism of $BERO using $oBERO, maintaining the prices of $BERO and $hiBERO above $1, while providing $hiBERO holders with non-liquidatable borrowing opportunities for the $HONEY deposited during the minting of $BERO. This will continue to attract external liquidity into the protocol, encouraging more protocols to develop liquidity through Beradrome and establishing a self-sustaining flywheel that redistributes the rewards it offers to users.
Additionally, Beradrome plans to operate its own nodes, obtaining $BGT Emission voting rights by accepting external $BGT delegations, separating this from its protocol operation mechanism, and allocating $BGT to the $hiBERO minting pool. If this plan succeeds in the future, $hiBERO holders will simultaneously receive both Beradrome's profits and $BGT, potentially attracting more liquidity into the Beradrome ecosystem.
Beradrome's Incentive Flow; Source: Beradrome Docs
6.3. Yeet
Yeet is an on-chain betting game protocol using $BERA. Anyone can place a bet of $BERA (approximately 0.5% higher than the previous depositor's $BERA) in Yeet's liquidity fund pool during the set game time to participate in the game, with the last user to deposit $BERA taking 80% of the total deposits in that liquidity fund 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, which they can then stake in Yeet's Liquidity Trifecta Vault to earn betting interest.
The Liquidity Trifecta Vault will take 9% from the $BERA deposited by users in the game and the $YEET they bet. This vault will use the deposited assets to provide liquidity to Kodiak, re-depositing the liquidity tokens received from Kodiak back into Beradrome to maximize the interest paid to depositors.
Yeet Liquidity Flow; Source: Yeet Docs
Additionally, Yeet plans to launch the YeetBond feature, allowing users to claim bonds for specific tokens at a discounted price based on the market price at maturity. In Berachain, there are various methods to create future value using liquidity, and the functionality provided by YeetBond is expected to be actively utilized by various protocols as a means to ensure liquidity.
Therefore, Yeet plans to provide optimized "fun features" and "effective features" for Berachain, establishing a solid community centered around its unique joyful humor from the test network phase, including the Yeetard NFT with $YEET reward enhancement features.
6.4. Ramen
Ramen is a Launchpad protocol similar to Honeypot Finance's Dreampad, helping new protocols preparing to launch on Berachain promote themselves and securely raise funds through fair token sales. The platform supports two Launchpad modes:
Fixed Price Mode: A method to purchase 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, which can be consumed to win in a lottery.
Price Discovery Mode: Unlike the fixed price mode, anyone can participate. Users wishing to purchase deposit assets equivalent to their desired substitute token price * quantity will engage in blind bidding to determine the settlement price. The right to purchase tokens at the settlement price is granted starting from the highest bidder.
Price Discovery Mode's Price Discovery Method; Source: Ramen Docs
In addition to the Launchpad functionality, Ramen also plans to launch Airdrop Recipes, which allow for easy setting and execution of token airdrop standards. Ramen provides all the necessary features from token issuance to sales and distribution, aiming to become the core infrastructure adopted by many new projects after the launch of the Berachain mainnet.
However, to maintain user interest in Ramen, it must possess a certain degree of protocol dependency characteristics, requiring successful operation of projects that need to sell tokens through Ramen and provide profits to token buyers. Therefore, it is necessary to continuously observe the long-term growth of projects selling tokens through Ramen and whether promising projects choose to use the Ramen issuance platform.
6.5. PuffPaw
PuffPaw is a Vape 2 Earn project where users can earn tokens through vaping. It measures users' smoking activities through self-produced vaping devices and liquid cartridges, distributing higher $VAPE tokens for lower nicotine content liquids to encourage quitting smoking.
Additionally, through its Leasing-Borrowing program, users who do not wish to smoke but want to participate can lend their devices to users who cannot purchase them and share profits, creating a structure that attracts Berachain ecosystem users regardless of smoking habits.
PuffPaw's Vaping Device; Source: @puffpaw_xyz
In December 2023, PuffPaw's PUFF PASS NFT sold out successfully as a ticket for project participation and plans to strengthen its Vape brand image and expand its ecosystem through additional device sales. Furthermore, the company plans to generate additional revenue by providing user device usage data to AI companies and insurance firms, supporting the value of $VAPE provided as rewards, while also planning to establish methods to create additional income for $VAPE holders using the PoL mechanism.
PuffPaw Flywheel; Source: PuffPaw Whitepaper
Having read this, we have studied the protocols representing various tracks on Berachain, each with its unique advantages. Additionally, there are other projects that do not require understanding Berachain's liquidity mechanisms to participate:
Beratone: Life simulation, role-playing game
Junky Ursas: GambleFi platform
Fable: Decentralized media/gaming platform
Onikuma: On-chain SocialFi platform
Moreover, various Vault/On-chain fund protocols such as Dirac Finance, NAV, and D2 will also be launched successively, simplifying various DeFi strategies in the ecosystem by combining Berachain protocol functionalities, allowing new users to easily participate and profit through straightforward risk management.
These protocols not only encourage more users to join the Berachain ecosystem to increase overall liquidity but also promote the use of the ecosystem.
Community
Most of the protocols in the Berachain ecosystem adopt a structure that allocates high returns to liquidity providers to gain initial liquidity, actively utilizing the PoL mechanism and employing NFTs and memes to build communities as a means to further strengthen and expand these structures.
Since the PoL mechanism allows users holding more $BGT and liquidity in the ecosystem to have higher negotiation power and more opportunities for incentives, some projects' strategies involve first forming communities through NFTs and memes, establishing reputation and status through various community activities, and then generating and distributing profits, even if these projects do not necessarily provide specific functionalities in their protocols.
7.1. The Honey JAR
The Honey Jar is a community united by a core idea, establishing sticky liquidity through a community-driven flywheel, developing around an NFT called Honeycomb in 2023.
The expansion method of The Honey Jar community is similar to the growth method of Berachain, both through the issuance and distribution of derivative NFT series of Honeycomb to holders. Based on the expansion of the community, it collaborates with various projects developed within the Berachain ecosystem, providing various benefits of these projects to NFT holders, thereby consolidating its position.
Subsequently, The Honey Jar produced various educational materials related to Berachain and provided useful services such as testnet Faucets for new users entering the Berachain ecosystem. Additionally, The Honey Jar is also a venture studio within the Berachain ecosystem, incubating community-based evaluation services S&P(Standard&Paws) for assessing Berachain ecosystem projects, as well as a platform Bera Infinity for measuring and rewarding contributions to the Berachain ecosystem.
According to The Honey Jar's Ecosystem Explorer, as of January 11, there are a total of 89 projects that Honey Jar directly participates in or has cooperative relationships with, establishing Honey Jar as the most influential core community in the current Berachain ecosystem. Furthermore, users holding Honeycomb NFTs will also receive NFT whitelist and token airdrop opportunities from numerous cooperative projects, making Honeycomb the NFT series in the Berachain NFT ecosystem, aside from Bong Bears and Rebase NFT, that maintains the highest floor price of 0.6 ETH.
Honey Comb NFT; Source: Opensea
In the current bArtio Testnet, the $BGT representation earned by nodes operated by Honey Jar ranks third, only behind nodes operated by Infrared and Kodiak. We can also see that the subsequent rankings are also community-centered projects, including Beraland, which provides Berachain-related information in podcasts, and TTT, which provides educational materials for Vietnamese users and operates nodes, both of which are the projects that have earned the most $BGT representation after Honey Jar.
bArtio Testnet Validator Rankings; Source: BGT Station
From this data, we can understand that obtaining advantages in the PoL mechanism through community-centered strategies is an effective approach in the current Berachain ecosystem.
Conclusion
In this discussion, we explored how the foundational agreements of the Berachain ecosystem (such as DEX, liquidity staking, and lending protocols) combine various functions to create complex financial services. Through examples of some ecosystem projects, we learned how different protocols attract user interest and liquidity through Berachain's PoL mechanism and unique community culture with "high yields" and "entertainment."
At the same time, Berachain recently announced plans to support the issuance of the $BERA token and initial ecosystem liquidity through Boyco, RFA (Request for Application), and RFC (Request for Community), indicating that the mainnet is about to launch.
Boyco: A liquidity platform before the mainnet launch, allowing protocols planning to deploy on Berachain to negotiate liquidity and future reward distribution plans with liquidity providers in a transparent environment.
RFA (Request for Application), RFC (Request for Community): After the launch of the Berachain mainnet, a plan to allocate $BERA tokens to projects actively developing or building communities within the ecosystem. Selected RFA and RFC will continuously contribute to the ecosystem using the allocated tokens, promoting initial ecosystem activities and liquidity activities through distribution to ecosystem users.
From these plans, it can be inferred that Berachain will experience rapid growth after the mainnet launch, so users planning to participate in the early ecosystem should closely monitor the developments of RFA and RFC projects to formulate their strategies for engaging with the ecosystem.
Currently, the Pre-Boyco treasury operated by protocols such as Stakestone, Ether.fi, and Ethena, along with the Boyco treasury launched on January 28, has secured 2% of the initial $BERA token supply. As of January 31, these treasuries have accumulated a total deposit amount of $2.35 billion. If this liquidity is directly utilized by ecosystem protocols after the mainnet launch, Berachain's TVL will surpass that of Sui, which currently ranks 8th in TVL.
Boyco Dashboard; Source: Boyco
As the end date of Boyco on February 3 approaches, users are expected to deposit funds into the high-yield treasury in the final days, further boosting the total TVL. Additionally, considering that Berachain's PoL structure encourages liquidity inflow and recirculates the profits generated back into the network, we estimate that the network's TVL will significantly increase from its current figures after the mainnet launch.
However, we cannot definitively say that this ecosystem-prioritized reward structure, along with attempts to strengthen it through Boyco and RFA/RFC, can perfectly guarantee Berachain's long-term sustainability. Nevertheless, the successful establishment of the ecosystem and community cases before the official launch of the mainnet is quite rare in the blockchain industry, making it an important reference case for projects that will be launched in the future.
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