PoL + Three-Token Model + Growth Flywheel? A Deep Dive into the New Blockchain Berachain
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PoL + Three-Token Model + Growth Flywheel? A Deep Dive into the New Blockchain Berachain
This article will provide a detailed introduction to the technical highlights and innovations of Layer 1 public blockchain Berachain, including its "Proof of Liquidity" consensus mechanism, three-token model, and EVM-compatible Polaris framework.
Navigating Web3 tides with focused insightsBy: SANYUAN Labs
Introduction:
Recently, the Layer 1 public blockchain Berachain launched its public testnet Artio. Benefiting from the current market hype around modular blockchains, Berachain has quickly gained massive attention online. However, Berachain is more than just a modular chain—it features multiple technical innovations such as the "Proof of Liquidity" consensus mechanism, a three-token economic model, and the EVM-compatible Polaris framework. In this report, SANYUAN Labs provides a detailed analysis of the new L1 blockchain Berachain.
Project Overview:
Berachain is an EVM-compatible L1 public blockchain built on the Cosmos SDK, secured by a Proof of Liquidity consensus mechanism. Berachain's technology is based on Polaris—a high-performance blockchain framework designed to build EVM-compatible chains atop the CometBFT consensus engine.
Products & Innovations:
Products:
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Berachain Protocol: An EVM-compatible L1 blockchain built on the Cosmos SDK
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BEX: Berachain’s native decentralized exchange where users can acquire new tokens and provide liquidity
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Berachain Oracle: A fully integrated universal price oracle with associated Cosmos modules and precompiles, enabling applications and users to interact seamlessly.
Innovations:
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EVM Compatibility: Built on the Cosmos SDK while integrating EVM at the technical level, simplifying development and accelerating early ecosystem growth. According to statistics, approximately 71 projects are already building on Berachain, with some live—most being native to the Berachain ecosystem.
List of ecosystem projects: https://docs.google.com/spreadsheets/d/1tLOrxMnws6NX-0JMAIKH1ULFmjDYv2LVvYG8Lbv2kpU/edit#gid=659852632
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Polaris Framework: Berachain’s EVM compatibility comes from the Berachain Polaris EVM library. Polaris delivers an enhanced EVM experience—a highly scalable and interoperable EVM framework friendly to Ethereum developers.
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Modularity: Offers a modular EVM framework that provides execution environments for smart contracts on Berachain. Any project can integrate and build new modular EVMs using Berachain.
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Innovative Consensus Mechanism: Unlike Ethereum’s Proof-of-Stake (PoS), Berachain adopts Proof of Liquidity (PoL). Through mechanisms including liquidity provision, liquidity mining, proof of liquidity, and liquidity governance, it improves coordination between network liquidity, staking centralization, and alignment between protocols and validators.
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Three-Token Model: Separates gas token from governance token, addressing the issue of lost liquidity caused by token staking to a certain extent.
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Meme Culture and Community-Driven Development: Strong community culture with meme elements. The NFT series “Bong Bears,” launched in August 2021, had a mint price of 0.0694 ETH and later re-based into additional Bears NFTs, as shown below.
According to estimates, the total value currently exceeds 400 ETH:
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1 bond (63 ETH)
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2 boo (20.6 ETH × 2)
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4 baby (10 ETH × 4)
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8 band (5.68 ETH × 8)
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16 bit (3.45 ETH × 16)
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Bong (169 ETH)
Community and User Data:
Social Media:
Testnet Data:
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The testnet launched on the 11th and attracted over 300,000 users within the first 48 hours, generating approximately 1 million transactions
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At one point, the mempool became completely full. Due to the overwhelming volume of requests, the faucet was temporarily paused to alleviate network congestion—an unprecedented situation in the Cosmos ecosystem
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Users can currently participate in the Artio testnet Odyssey campaign to earn potential airdrop rewards
Economic Model:
Unique Three-Token Model:
Unlike Ethereum, which has only one native token (ETH), or Terra, which had two (LUNA and UST/SDT), Berachain features three native tokens:
$BERA: The gas token used as network fuel, with a 10% inflation rate.
It can be earned by validating transactions or providing liquidity on the Berachain platform.
$BGT: The mainnet governance token used for network governance, obtained by staking $BERA.
BGT is non-transferable and cannot be traded.
BGT can be earned by performing specific actions in authorized dApps, such as:
Providing liquidity on the native BEX
Borrowing HONEY on Bend
Supplying HONEY to Berps via the bHONEY vault
When delegating BGT to validators, users can create governance proposals and vote on them. The distribution weights for staking rewards across various assets are determined through BGT governance—for example, voting on proposals to allocate BGT grants to specific LP pools. After authorization, users begin earning various network rewards.
BGT can also be burned 1:1 to obtain BERA. This conversion is one-way; BERA cannot be converted back into BGT.
$HONEY: A native consensus-staked stablecoin pegged closely to 1 USDC, serving as the medium for protocol revenue distribution. It pairs with other tokens in liquidity pools on Berachain and helps bootstrap liquidity for native projects built on the platform.
Upon mainnet launch, HONEY will be available for minting via the HONEY dApp or purchasable on BEX.
How Does It Work?
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Provide liquidity on Berachain using $BERA, $HONEY, and other tokens to earn block rewards, gas fees, and BGT
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Stake $BGT
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Stake $BGT to earn additional $BERA, $HONEY, and $BGT rewards
Funding and Team:
Funding:
April 20, 2023: Raised $42 million in Series A funding at a $420 million valuation. Led by Polychain Capital, with participation from OKVentures, Shimano Capital, and Robot Ventures.
Additionally, several notable individual investors participated:
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Santiago Roel Santos: Former General Partner at ParaFi Capital
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Zaki Manian: Head of Tendermint Labs and advisor to the Cosmos project
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Joey Santoro: Founder of Fei Protocol. Although the project failed, his experience offers valuable insights for Berachain
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Georgios Vlachos: Co-founder of Axelar and founding team member of Algorand
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Mustafa Al-Bassam: Co-founder and CEO of Celestia
Team:
The team operates anonymously. However, raising $42 million indicates significant expertise, deep connections, and extensive resources within the crypto space.
Conclusion:
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The unique three-token economic model separates gas and governance functions, maximizing liquidity release and protecting the interests of active network participants (such as users contributing high transaction volumes and gas fees). It resolves the conflict between staking participation in governance and maintaining liquidity. Therefore, we believe Berachain is well-positioned to lead DeFi innovation and foster highly liquid, capital-efficient DeFi protocols.
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As user growth drives higher fee revenues, Berachain will attract even more users and ecosystem projects. Combined with its governance reward mechanism, this creates a positive feedback loop.
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However, rationality should be maintained. Whether Berachain meets expectations depends on future developments—including project progress, ecosystem expansion, and protocol security.
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