What is Bera Chain? In-depth Analysis of Bera Chain

I. What is Bera Chain?

Berachain is a developing EVM-compatible blockchain leveraging its unique “Proof-of-Liquidity” consensus to allow users to stake layer 1, bluechip DeFi, and stablecoin assets with Berachain validators. It is constructed using the Cosmos-SDK and was inspired by the Bong Bears NFT community.

The $BERA, $BGT, and $HONEY tri-token structure serves as the foundation of the chain. Although Berachain still lacks official documentation and a public testnet, it is attracting an increasing number of new users and protocols.

II. History of Bera Chain

Get started with meme culture,a 101-bear NFT collection dubbed Bong Bears that was made available on Ethereum at the end of 2021 served as the foundation for BeraChain.

In contrast to the excellent, lovely, and decent project that investors frequently anticipate in the financial markets, Bong Bears’ starting point is more of a joke: Twitter is filled with brief updates, occasionally consisting of nonsensical sentences, parody images, or hints about the project’s future goals, but there are no threads that explicitly outline what the initiative has done, is doing, or will do in the future.

Even yet, the initiative was “supported” on the OlympusDAO – Olympus Off Topic channel of Discord and later received support from well-known industry players, including the company’s creator. There is no clear information about the project’s roadmap other than the fact that the developer Bong Bears holdings will have a new NFT added to each collection that is subsequently released. OlympusDAO is Zeus, Fiskantes, a member of Zee Prime Capital, DCF God, etc have continuously “scanned the floor,” driving the price of NFT to all-time highs. The project will produce a new collection every few weeks or months, and the owners of the previous collection will receive an NFT from the new collections. The total number of “bears” in this project community will increase to 9,311 with the debut of a total of 7 new collections. Five rebases have been released as part of the project so far, including Bond Bears, Boo Bears, Baby Bears, Band Bears, and Bit Bears.

With regard to BeraChain, the OlympusDAO community approved a petition in March of this year to invest 500 000 USD in this project, accounting for 1% of the total initial token supply of the startup project at the valuation when it is 50 million USD; The remaining 1% of tokens will be divided among OlympusDAO as a strategic partner, bringing the total number of tokens that OlympusDAO owns to 2%.

However, when we first heard the name “BeraChain,” we immediately associated it with the word “bear,” which is not exactly kind to financial investors.

III. Striking Features of Bera Chain

To receive block rewards in the form of BERA, users can single-side stake L1 tokens like wETH, wstETH, wBTC, wAVAX, wFTM, ATOM, wBNB, and BERA as well as stablecoins like USDC, USDT, DAI, FRAX, and BUSD. Users can also stake a collection of upcoming blue-chip governance tokens (TBD before launch).

Berachain validators use staked assets to protect the network. If they behave deliberately, their share is reduced and they are placed in a temporary jail. Users put chosen assets into “consensus vaults” to transfer to validators, with each asset maintaining a unique consensus weighting.

These weights are chosen by the team before to launch, however once Berachain is operational, governance will make the final choice. These governance-controlled weights act as gauges because consensus weighting determines the $BERA staking rewards for each asset. In this way, Berachain develops possibilities for the bribe market at the level of consensus!

Staked assets are used as liquidity on Berachain’s native vAMM. A long position that the chain itself has established on the perp exchange shields liquidity providers from temporary loss. Users can leverage trade supported assets on the perpetual futures exchange that is a part of the vAMM.

IV. Core Technology of Bera Chain

1. How Does it Work? Proof-of-Liquidity

The team decides on these weights before launch, but once Berachain is operational, governance will make the final decision. These governance-controlled weights function as gauges, with consensus weighting determining $BERA staking rewards per asset. At the consensus level, Berachain thus offers the potential for the bribe market!

2. How Does it Work? Borrowing

Users are able to use their staked assets as collateral for a $HONEY loan! The over-collateralization ratio for $HONEY, which is dollar-pegged and typically exceeds 150%, varies depending on the asset. Users can leverage or spot trade with $HONEY, or they can go even further by “leverage staking,” which involves purchasing more collateral to stake and generate more $HONEY. Compared to other networks, Berachain stakers have less incentive to unstake because they have such a liquid position while reaping staking incentives.

The AMM’s fundamental liquidity layer, $HONEY, enables users to easily trade any asset for $HONEY while also producing deep, viscous liquidity for Beras. When paired against $HONEY, a token that may be staked on Berachain benefits automatically from high liquidity.

The chain automates liquidations. Instead of holding collateral auctions, the collateral is moved to the network reserves while the debt on the position is also decreased.

V. Tokenomics

As previously established, the three tokens that make up Berachain are $BERA, $BGT, and $HONEY. As mainnet approaches, more information will become available on supply and other aspects of tokenomics.

Stakers can utilize their $BERA incentives to cover network gas costs. All of the $BERA spent for gas is burned, and its issuance is indexed at a 10% yearly inflation rate. Stakers of $BERA also receive the $BGT token. To obtain $BGT, you must stake $BERA.

Holders of the non-transferable ERC-721 token $BGT can vote on issues like fees and tokens that qualify for the consensus. It functions as a sort of receipt for staked $BERA, and after unstaking, you “redeem” $BGT. Holders of $BGT get fees from DEX swaps, interest rates in $HONEY, financing rates on perps, liquidation fees, and other sources, all of which are paid in $HONEY.

The native stablecoin, $HONEY, is pegged to the dollar and is minted using Berachain-staked resources. It is referred to as the ecosystem’s “base layer” and serves as a middleman for all DEX deals, a reliable medium of exchange for the local ecosystem, and a means of supporting perps. It serves as the foundation for Berachain’s capital effectiveness.

The $HONEY peg is algorithmically maintained by a number of techniques, such as restricted interest rates, a $HONEY AMO to limit slippage and fees on specific pairings, being constantly demanded to pay fees like funding rates, and being over-collateralized.

VI. Bera Chain Ecosystem

The current Berachain ecosystem includes foundation projects built first on BeraChain and a number of cross-chain/multi-chain projects that intend to expand to this blockchain.

1. Foundation project

Some of the notable platform projects that will launch on BeraChain include:

Crocswap: This will be one of the first decentralized exchanges (DEX) on BeraChain. The special feature of Crocswap is (i) using only a single smart contract (instead of many smart contracts like other DEXs) with each liquidity pool stored in a compact data structure that saves money. save gas fees and (ii) operate on a Constant Function Market Maker (CFMM) model like Uniswap V2 for small transactions but also allow users to provide liquidity at certain price ranges like Uniswap V3 .

HoneyPool: Project on prize-savings, ie interest for savings that users deposit will be distributed in a lottery style (instead of allocating with a fixed interest rate according to the deposit term). HoneyPool will use the money that users deposit into this protocol to deposit into other DeFi protocols such as AAVE, collect interest, and then draw to find winners.

Hibernation: Project on yield-farming on BeraChain

In addition, there are a number of other projects that are still in the process of completing documents/whitepaper such as BeraCreek (lending project), BeraMarket (NFTFi project), Beramuda Finance (yield-farming project), Green Bera (the “most ponzi project you will ever know in your degen life” – as described by the founder himself, but overall this is also a yield-farming project through making profits from the difference. price difference, from MEV, from taxing project token sellers and from HONEY farming)…

2. Multi-chain project

Synapse: Synapse protocol will be an important bridge between BeraChain and 18 other blockchains outside the Cosmos ecosystem such as Ethereum, Avalanche, Polygon, Cronos, etc.

dAMM Finance: Decentralized lending project, expected to be launched on Avalanche, Arbitrum, Polygon and BeraChain in Q4 2022

Reacted Cartel: As noted above, BeraChain’s tokenomics model can foster a “bribe market” when a war similar to Curve Wars occurs and so the Redacted Cartel can deploy the service. their Hidden Hand service on BeraChain to join this war, similar to how they used to support Balancer, Frax Finance and Floor DAO

In addition to OlympusDAO, TempleDAO is also another name that mentioned investing in BeraChain in May of this year and also plans to expand into this ecosystem. However, TempleDAO will not make any official announcement until BeraChain is officially launched.

3. Conclusion

Now that we are aware that Berachain is real and that the mainnet will launch in three months, we can prepare. Berachain, a fresh addition to the Cosmos universe, aims to revolutionize the cryptosphere by introducing a brand-new layer 1 design that has never been tried before.

From a small group of marijuana-smoking bear enthusiasts, Berachain has developed into a thriving layer 1 ecosystem with innovative internal mechanics and design. It will only be a matter of time before the rest of the market catches on.