Discussion on the Characteristics of Berachain Ecosystem and Overview of Core Projects Before Issuing Coins

Introduction

Berachain is a Layer 1 network characterized by the PoL (Proof of Liquidity) consensus mechanism, aligning the interests of validators, liquidity providers, and protocols. Currently, Berachain is conducting the second testnet "bArtio Testnet" to address the issues identified in the first testnet.

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 participating in testing Berachain's PoL mechanism has exceeded 2.38 million. Although this is only in the testnet phase, these figures indicate a high level of market attention towards Berachain and its ecosystem.

Starting from the end of 2024, Berachain's founder Smokey The Bera has recently introduced Boyco through a post on X, implying that "Q5 will happen before April" and indicating that the launch of the mainnet is imminent. This has also attracted both new and old users to join the Berachain ecosystem.

However, to participate in the Berachain ecosystem, it is necessary to understand their PoL mechanism. Before the mainnet launch, the 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 fields of the Berachain ecosystem to effectively lower the barriers to user participation. We will discuss projects that have outstanding performance in various fields and elaborate on how each protocol utilizes the PoL mechanism.

DEX

Berachain has a native DEX called BEX, which will be launched as BeraSwap upon the mainnet launch. BeraSwap will support seamless 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 effectively compete with BEX to attract users and liquidity.

Kodiak

Kodiak is a DEX that stands out from the Berachain incubation project "Build a Bera". In addition to supporting BEX's Uniswap v2-style functionality, which distributes liquidity evenly across the entire price range (, Kodiak also offers a CLAMM ) concentrated liquidity automated market maker ( feature, 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 efficiently. In addition, Kodiak also offers an Island feature to help users automatically reset and balance the CLAMM range, reducing the hassle of managing liquidity supply positions. This feature uses 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 the users' CLAMM liquidity positions through the Island feature, allowing this LP token to be used in other protocols as well, facilitating more flexible and diverse ecosystem 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 3rd, they have received the second highest BGT authorization in the bArtio Testnet.

![Discussion of Berachain's ecological features and overview of core projects before issuing coin])https://img-cdn.gateio.im/webp-social/moments-617729a1894e30baae6111b9148bc7e1.webp(

) Honeypot Finance

Honeypot Finance is a protocol that supports all aspects of the token lifecycle, from issuing to providing liquidity and effective trading, 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, allowing for the collection of user orders within a specific timeframe and executing 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 the issuance and trading of meme coins, featuring functionalities such as preventing bot sniping and refunding participating users if the 24-hour fundraising target is not met.

Similar to Kodiak, Honeypot Finance also plans to operate as a validator after the mainnet launch, offering its governance coin $HPOT as a delegation reward to users who delegate $BGT.

In addition, Honeypot Finance utilizes the accumulated $BGT to release to the $HPOT liquidity pool, thereby enhancing the liquidity of $HPOT. The protocol also plans to increase the token value by using node operation revenue 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 other protocols advocating for efficient and convenient trading functions preparing for the Berachain mainnet, including BurrBear, which supports capital-efficient trading by aggregating three or more similarly priced underlying assets ### similar to Curve Finance (, the liquidity aggregator OogaBooga, and the cross-chain abstract trading protocol Shogun.

![Discussion on the Characteristics of Berachain Ecosystem and Overview of Core Projects Before Issuing Coins])https://img-cdn.gateio.im/webp-social/moments-3096dfa14c967823b696102fc9f8e80b.webp(

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 an authorization structure for native coins, general users who do not operate nodes will not be able to receive network rewards.

To address this issue, liquidity staking protocols distribute rewards by accepting 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 also become core infrastructure for PoS networks.

In contrast, although the operation of Berachain's nodes requires 69,420 $BERA, its structure allows liquidity providers to earn network rewards calculated in $BGT and liquidity provision interest when they deposit liquidity tokens obtained from the ecological protocol into Berachain. Therefore, besides the different methods and sequences, Berachain has essentially built liquidity staking into the network protocol.

Although the operation of nodes on the Berachain main network requires 250,000 $BERA, the structure of Berachain is designed to distribute $BGT rewards and interest to liquidity providers. Therefore, apart from differences in methods and sequences, Berachain essentially incorporates 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 launch their liquidity pools, as demonstrated by Kodiak and Honeypot Finance, by operating their respective nodes.

In this context, Berachain's liquid staking protocol will provide the voting rights to determine the emission of $BGT) and the redemption functionality of (. This allows Berachain ecosystem projects to incorporate the liquidated $BGT into their protocol mechanisms without the need 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.

) Infrared

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

Infrared-operated vaults can accept LP tokens from liquidity pools, generating $BGT interest rates while running network nodes. When users deposit LP tokens into these vaults, Infrared will use these tokens to generate $BGT, and users can claim $iBGT### liquidated $BGT( in proportion to their deposited LP tokens.

Users can utilize the received $iBGT in the following ways:

• Stake in Infrared to receive rewards generated by the node

• Use in other DeFi protocols

• Sell for profit

Therefore, Infrared concentrates and distributes the rewards generated by the PoL mechanism by converting $BGT into a liquid token, benefiting fewer $iBGT stakers, while also helping other protocols in the Berachain ecosystem incorporate $iBGT into their protocols, allowing their platforms to offer higher returns to their users. In addition, Infrared plans to launch new features that will enable them to receive and settle the $BERA required for node operation while running nodes and distributing profits.

The best example of effectively utilizing the Infrared functionality is Kodiak's Island Pool, which we also briefly introduced in the DEX field mentioned above. After the mainnet launch, the Infrared plan will launch Kodiak's Island Pool ), which has been operating on the testnet (, allowing users to use Kodiak's CLAMM for more efficient $iBGT farming, and the $iBGT received 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 options within the ecosystem.

Based on the interconnectivity of the protocol and effective ecological gameplay, Infrared has gained the attention of many users and is currently accepting the most $BGT delegation in the bArtio Testnet. In addition, many ecological projects have also collaborated 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 regarding 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 for the $BGT it holds will be granted.

![Discussion on the Characteristics of Berachain Ecosystem and Overview of Core Projects Before Coin Issuance])https://img-cdn.gateio.im/webp-social/moments-335ffb36053ab8848f45da2d49ca6254.webp(

) BeraPaw

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

The governance token of BeraPaw is $PAW, and users can use the $BGT they hold from 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 $PAW tokens for $BGT Emission voting 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 liquid staking protocols that are preparing to officially launch on Berachain. Although these protocols not only allow for more derivatives, 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 liquid staking protocols that offer $BGT liquidation functions are expected to be adopted by many users and protocols, becoming core infrastructure.

![Discussion on Berachain ecological features and overview of core projects before coin issuance])https://img-cdn.gateio.im/webp-social/moments-bd6766a4939b4f048591e57df2445590.webp(

Lending

Berachain also has a native lending protocol BEND, which offers 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 earn interest, but borrowing $HONEY will generate $BGT rewards.

Through this structure, BEND strengthens the triple token economic structure of Berachain, generating basic interest for $HONEY while increasing lending demand through $BGT, enriching the liquidity of the ecosystem. Users can also execute $BGT leveraged farming by repeatedly swapping borrowed $HONEY back to $WETH, $WBTC, and depositing them into BEND.

Next, we will discuss in detail the preparations to be made in Berachain.