What is the Berachain?
Layer One (L1) blockchain Berachain uses a novel consensus technique called proof-of-liquidity (PoL) to encourage users to add liquidity to its ecosystem. Because the L1 is EVM-compatible, it can run the decentralized apps that are presently running on Ethereum (ETH).
In order to provide blockchain modularity in its L1, Berachain leverages the Cosmos SDK. As a result, developers can take advantage of outside infrastructure for settlement, execution, consensus, and data availability. Future technological developments will benefit this architecture due to its stack upgradability.
Definition of Berachain’s Proof of Liquidity
The distinctive PoL consensus process of Berachain distinguishes it from other L1s on the market.
If you’re curious about how PoL functions on Berachain, you should know that it employs a flywheel strategy in which users, dApps, and validators collaborate to increase network liquidity and user retention.
PoL encourages users to add cryptocurrency-based liquidity to their preferred liquidity pools, often referred to as vaults or gauges on Berachain. Liquidity providers receive Berachain’s government token, $BGT, in return.
Like the proof-of-stake (PoS) consensus process, the BGT rewards come from network validators who get BGT tokens for proposing new blocks.
The BGT tokens held by Berachain validators were reassigned to the vault of their choosing.
Therefore, by giving out dApp tokens in return for pointing liquidity providers to their dApp vaults, dApps on Berachain incentivize validators.
In order to receive rewards for dApp tokens, users (liquidity suppliers) may also assign their BGT tokens to validators.
Validators on Berachain aim to maximize BGT delegated to them, as rewards from proposing new blocks depend on governance tokens. Proof of liquidity simplifies user acquisition and liquidity acquisition for applications, providing validators with revenue streams.
Which Three Berachain Tokens Are They?
Three tokens—Bera, Honey, and Bera Governance Token (BGT)—power the Berachain L1 ecosystem. To vote on proposals for governance and decisions pertaining to the ecosystem, users of PoL liquidity on Berachain can obtain the non-transferable token known as BGT. The native coin, BERA, is staked to activate validator nodes and is utilized for gas costs. A stablecoin backed entirely by US dollars, Honey is based on the dollar.
The Berachain Team: Who Are They?
In August 2021, Berachain began as a non-fungible token (NFT) collection known as Bong Bears. The development team began fundraising in 2022 in order to create an L1 blockchain.
Three co-founders of the project go by the aliases Homme Bera, Dev Bear, and Smokey the Bera.
Before switching to cryptocurrency in 2015 or 2016, Smokey began his career in the biotech and healthcare sectors, according to research firm Revelo Intel.
Berachain secured $42 million in seed money in April 2023 from Goldentree Asset Management, Polychain Capital, Hack VC, Shima Capital, and Robot Ventures, among other investors.
One year later, in one of the largest cryptocurrency investment deals of 2024, Brevan Howard Digital and Framework Ventures led a $100 million Series B capital round for Berachain.
Expert and Analyst Opinions on Berachain
A $100 million Series B fundraising round in Berachain, a blockchain that enables users to directly reward particular apps and industries to develop on its chain, was co-led by Canadian cryptocurrency investment firm Framework Ventures. As a result, more than 200 apps committed to building on the chain.
With over 300k users and around one million transactions completed in its first 48 hours of operation, Berachain’s testnet has grown to be the most utilized in blockchain history since its inception two months ago. Currently, the testnet has handled 100 million transactions and has over 8 million unique wallets.
Revelo Intel, a cryptocurrency research business, stated in a newsletter sent by email:
“Proof of liquidity efficiently converts liquidity into security, giving stakeholders financial incentives and ecosystem management, and promoting network usage and growth that is sustainable.
“When it comes to ecosystem expansion, Berachain places a higher priority on reducing friction, enhancing the quality of life for developers, and enabling builders through proof of liquidity.”
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