Berachain - jichi

Investment

Victoria, Seychelles, April 20, 2023 - OKX Ventures, the investment arm of leading cryptocurrency exchange and Web3 technology company OKX, announced today a strategic investment in Berachain, a Layer 1 blockchain based on Cosmos. The funding round was led by Polychain Capital, with participation from Hack VC, dao5, Tribe Capital, Shima Capital, Robot Ventures, Goldentree Asset Management, former partner of Dragonfly Capital's liquid asset fund (now Brevan Howard), Celestia founder Mustafa Al-Bassam, Tendermint co-founder Zaki Manian, and over twenty other DeFi founders. The total investment is around $43 million.

Introduction

Berachain is a Layer 1 blockchain developed on the Cosmos SDK, compatible with EVM and high-performance. Its unique liquidity proof-of-stake consensus allows users to stake a range of blue-chip digital assets, which not only enhances the security of the blockchain but also provides liquidity on its native decentralized spot and perpetual exchanges, as well as its native stablecoin $HONEY. By staking on-chain assets, users, protocols, DAOs, and institutions can earn block rewards and network fees while supporting the development of comprehensive DeFi liquidity pools. The Berachain ecosystem has already secured commitments of over $250 million TVL and plans to launch a public incentive testnet in the coming weeks. The whitepaper is still under construction.

Economic Model

Berachain introduces a unique three-token system, including BERA, the native gas token, HONEY, the aforementioned native stablecoin, and BGT, the non-transferable "Bera governance token". Users can earn BGT over time by staking BERA or other permissioned tokens, allowing them to receive HONEY generated by the underlying chain architecture as a reward for their participation in governance. The team aims to create valuable assets for long-term supporters of the ecosystem by linking the token economics of BERA and BGT with the underlying layer of the chain and directly distributing fees to stakers, while addressing the challenges of tokenized governance in the DeFi 2.0 era.

"Proof of liquidity is the first raw adjustment of incentives between liquidity and security at the protocol level. Berachain has a unique opportunity to become the protocol with the largest total accessible liquidity in any existing chain - attracting capital in both the EVM and Cosmos ecosystems and enabling a range of transaction activities while contributing to network security. If executed properly, we will build a protocol with the capital depth and speed of off-chain solutions, as well as the transparency and customizability of on-chain ecosystems," said Smokey, founder of Berachain.

Liquidity Proof-of-Stake Analysis

Berachain's distinctive feature is its liquidity proof-of-stake consensus, which is a witch-resistant mechanism that utilizes "consensus" insurance vaults to calculate validator voting weights, allocate block rewards, and incentivize capital flow speed and liquidity depth.

Users deposit various assets into the consensus insurance vault system, thereby obtaining tokenized shares representing their deposits (similar to ERC-4626, which aims to standardize DeFi yields), which will be used for governance. Users can also delegate their deposits to specific validators, thereby allocating consensus voting rights to the validators of their choice (similar to DPOS delegated proof-of-stake systems).

The deposited assets will be used to provide liquidity for decentralized exchanges and lending markets, while maintaining the peg of HONEY through the Peg Stability Module.

It should be noted that, in order to balance the witch-resistant mechanism, there may be intermittent loss of user assets, but corresponding users will receive transaction fees and block rewards.

Testnet Tutorial

Beradex Testnet Guide