What is Berachain? Blockchain develops PoL mechanism

What is Berachain?

Berachain is a high-performance EVM-based Layer1 blockchain that uses Proof-of-Liquidity (PoL) mechanism, built on the EVM-focused Cosmos SDK with BeaconKit module. The SDK is built with the purpose of leveraging Tendermit mechanism and BFT(Byzantine Fault Tolerance).

NFT Bong Bears is the predecessor of the Berachain team, although they share the same developer, these are two completely independent projects. In the early days of its launch, Bong Bears created a lot of buzz and was heavily promoted thanks to Olympus DAO.

Berachain officially developed from April 2022, at that time Berachain introduced a completely new mechanism in blockchain, Proof-of-Liquidity (PoL) to prevent Sybil-attacks.

Mechanism of Berachain

Source: Berachain Whitepaper

Proof-of-Liquidity is a Proof-of-Stake based consensus mechanism that realigns economic incentives between validators, applications, and users. Berachain consensus borrows from the Proof-of-Stake (PoS) model, which consists of two main components:

1. $BERA- Validators secure the chain by staking native gas tokens

2. $BGT- A soul-bonded governance token distributed by validators for proposing new blocks, which will eventually be rewarded to users who provide liquidity to the ecosystem

Proof-of-Liquidity helps prevent Sybil-attacks through the use of “consensus” vaults to calculate rewards for validators and staking users.

Source: Berachain Whitepaper

Operation process:

• Users stake wETH, wstETH, wBTC,…. into consensus vault to delegate to validators. Berachain allows using other chains' tokens for delegation instead of having to use Berachain's tokens.

• Each staked token will have its own weight and receive BERA as a corresponding reward.

• Providing multiple tokens will avoid the forgery of multiple accounts (Sybil) to participate in the staking process, while ensuring the DeFi nature of the network.

Source: Berachain Whitepaper

Proof-of-Liquidity Participants

1.Validators

• Secure the network by validating and proposing new blocks

• Receive transaction fees, block rewards in $BGT, and incentives from projects for targeting $BGT to their Reward Vaults.

• Increase $BERA stake to participate in the active validator group, attract $BGT delegation from users, and redistribute value to delegators to maximize benefits

2. $BGT holders and farmers

• Participate in governance through voting, providing liquidity to the ecosystem, and delegating $BGT to validators to influence rewards.

• Earn $BGT by staking receipt tokens in Reward Vaults, then delegate $BGT to validators to receive incentives from projects.

• Select validators based on criteria such as reward distribution strategy, commission rates, and performance to maximize profits.

3. Projects in the ecosystem

• Create Reward Vaults to capture $BGT emissions from validators, providing incentives to encourage users to participate and provide liquidity to their protocol.

• Set up vaults via factory contracts, propose to be whitelisted, and manage incentive rates to attract the attention of validators and users.

What is BeaconKit?

BeaconKit is a modular and customizable framework developed by Berachain, which aims to provide a consensus layer for Ethereum-based blockchains.

It integrates the CometBFT consensus algorithm with a modular middleware layer, allowing blocks to be received and processed from any execution environment that complies with the Engine API specification. This enables support for clients that execute unmodified EVMs, making the chains EVM-compatible.

Using BeaconKit offers many benefits, including:

• Complete transactions in just one slot (single slot finality), faster than Ethereum's ~13 minutes.

• Optimistic payload building, which executes block proposals in parallel with voting, reduces block generation time by up to 40%.

• Complies with Ethereum 2.0 modularity.

• Fully compatible with Ethereum Improvement Proposals (EIPs).

Source: Berachain Whitepaper

Bonus vault

The Bounty Vault is a smart contract where users can stake their Proof-of-Liquidity (PoL) eligible assets to earn $BGT rewards. The Bounty Vault is the only way anyone can earn $BGT rewards and thus plays a key role in opening the gateway to the PoL ecosystem.

To receive $BGT, users must stake PoL-eligible assets in their reward pool. The protocol implementing the reward pool can decide how users acquire PoL-eligible assets for staking. The idea is that protocols will leverage this to attract liquidity or stimulate activity and in return give users assets they can stake in their pool.

1. Users perform some actions that result in receiving eligible assets under PoL, commonly referred to as receipt tokens.

2. Users stake PoL-eligible assets into the respective vault.

3. Users earn a portion of the total BGT emitted into that vault.

Tokenomics

• Project name: Berachain

• Token : $BERA

• Blockchain : Berachain

• Total supply: 500,000,000 $BERA

• Loại token : Ulitity&Governance

Token allocation and issuance

All parties follow the same ownership allocation schedule:

• Initial Unlock: After a one year freeze, 1/6 of the allocated tokens will be unlocked

• Linear Ownership: The remaining 5/6 tokens will vest linearly over the next 24 months

Berachain Governance

Berachain's governance system uses $BGT to allow token holders to make important decisions about the core functions of Proof of Liquidity and our core dapps. Here are some examples of what governance can be used for:

• Proof-of-Liquidity asset whitelist (e.g. new staking assets, incentivized asset whitelist)

• Native dApp governance (e.g. changing BeraSwap protocol fees)

Requirements: own more than 10,000 $BGT, processing time more than 1 hour and vote within 5 days, proposal result must be more than 20% of total $BGT supply.

Investor

Berachain has raised a total of $211 million in funding rounds, with a valuation of $1.5 billion. The funding rounds include:

• Series A (April 2023) : Raised $42 million, led by Polychain Capital, with participation from Hack VC, dao5, Tribe Capital, Shima Capital, CitizenX Crypto Ventures, and Robot Ventures.

• Private Round (March 2024) : Raised $69 million, with participation from Brevan Howard and Framework Ventures.

• Series B (April 2024) : $100M raised, co-led by Brevan Howard Digital and Framework Ventures, with participation from Polychain Capital, Samsung Next, Hack VC, and HashKey Capital.

Berachain is expected to launch its mainnet on February 6, 2025, marking an important step in deploying DeFi applications and expanding its ecosystem.

Follow HCCVenture to get the latest market information. Once again, we give our opinion on potential projects in the crypto market. This is not investment advice, consider your investment portfolio. Disclaimer: The views expressed in this article are solely those of the author and do not represent the platform in any way. This article is not intended to be a guide to making investment decisions.

Data from: Whitepaper Berachain

Data by HCCVenture

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