Berachain’s Higher Aspirations | Bankless

NFTs and memes are fundamental tenets of crypto culture. They’ve got a special way of connecting people with a mix of art, humor and a wink of satire. When combined together, they create a buzz that’s become the latest power move for marketing in crypto.

Enter Berachain: a prime example of using this go-to-market strategy to hit it big. It’s a story of how an NFT collection featuring stoned bears smoking weed sparked one of the most vibrant communities in crypto. 

But Berachain is not just about good vibes. They’re hard at work building an EVM-compatible L1 that’s got everyone talking. Today, we’re unpacking how Berachain, almost by accident, has become one of the most eagerly awaited launches in the industry.

The Lore of Beras: from Bong Bears NFTs to an L1

At the heart of Berachain’s origin was a simple idea. It all started with two pseudonymous degens, Papa and Smokey, who thought, “What if we just made some NFTs for fun, sold them to friends, and saw if they’re into it?”.

The mint, priced at a cheeky 0.0694 ETH per bear, was raffled off in various DeFi Discord channels. 

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The bears were a hit, and what started as a fun experiment quickly grew into a tribe of like-minded bears. Over time, the BFT collection has become one of the most desirable across crypto. Today, they boast a floor price of a whopping 200 ETH, a testament to their popularity.

Bong Bears also broke new ground in NFT design and community engagement by blending game theory elements and a rebase mechanism, which let owners get extra bears from future drops, essentially “rebasing” their stash. This gamified approach to NFTs created a loyal community of Bera fans.

Adding to the excitement was the Bera lore, fueled by catchy memes and phrases like “bera morning (bm),” “henlo,” and furthermore, the rallying cry “ooga booga.” Smokey’s appearances at conference panels donning a bear mask fanned the flames, and the march of the Bears continued.

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Then, on 4/20 last year, Berachain announced they’d bagged $42M in their Series A at a… $420.69M valuation.

The grand vision of Berachain became clearer – with the onboarding funnel of NFTs and memes, the goal was to build a one-of-a-kind L1 ecosystem.

Fast forward to January of this year, and Berachain’s public testnet “Artio” went live and has seen unprecedented usage. Riding on this wave, Berachain reportedly closed a $69M funding round, catapulting it to unicorn status with a whopping $1.5B valuation.

As Berachain gears up for its eagerly awaited mainnet launch later this year, let’s take a moment to explore the tech behind Berachain.

The Berachain Tech Stack

Berachain is a high-performance, modular EVM-compatible L1 blockchain built on top of the Cosmos SDK. It’s designed to build a sustainable incentive structure within the chain itself through its novel consensus model.

Here’s a (fairly technical!) breakdown of Berachain’s tech stack:

1️⃣ Berachain: The ‘EVM-Equivalent-Plus” Blockchain

At its core, Berachain is an EVM-compatible L1 blockchain that uses the Cosmos SDK. 

Its EVM compatibility comes from the Berachain Polaris EVM library, which elevates the EVM experience by introducing stateful precompiles and bespoke modules for smart contracts. This allows Berachain to not only support all standard EVM tools and operations but also enhance them with built-in, chain-specific features. This fusion of capabilities earns Berachain the title of an “EVM-equivalent-plus” blockchain.

2️⃣ Proof of Liquidity: Aligning Network Incentives

Proof of Liquidity (PoL) is a novel approach designed to align incentives between validators, protocols, and users within a blockchain’s consensus layer. The aim is to cultivate and maintain a robust liquidity pool within the Berachain ecosystem, ensuring its growth and stability over time.

Berachain introduces a tri-token model to facilitate this:

• BGT (Bera Governance Token): Earned through providing liquidity, BGT is a non-transferable token that grants holders governance rights and the ability to delegate to validators.
• BERA (Gas Token): This token is used as the gas token to pay for transaction fees on Berachain. BGT can also be burned 1:1 for BERA. (BERA cannot be converted into BGT).
• HONEY (Stablecoin): Pegged to the USDC, HONEY serves as a stable store of value and medium of exchange within the Berachain ecosystem.

In order for anyone to participate in the governance on Berachain, they must acquire the governance token, BGT. However, BGT cannot be bought from marketplaces, instead it has to earned by performing certain onchain actions such as:

• Providing liquidity to various liquidity pools on the DEXs on Berachain.
• Lending and borrowing HONEY on lending platforms and/or perps.

These are the exclusive methods to earn BGT. This creates an inherent requirement for anyone who wants to participate in Berachain’s governance to contribute to the ecosystem by adding liquidity.

Once users get BGT, they can delegate it to validators who are responsible for producing blocks on Berachain. Validators earn block rewards, which they share with their delegators through a system known as Berachef. Additionally, validators can incentivize users (bribe) to delegate BGT to them, thereby increasing their voting power and potential rewards. 

This set of actions fuels a flywheel of activity and stickier liquidity within the Berachain ecosystem:

• Users contribute liquidity to DEXs and financial protocols to earn BGT.
• Increased liquidity draws additional participants to the network.
• A growing user base results in higher transaction volumes.
• Higher transaction volumes translate to greater fee accumulation.
• Enhanced fee rewards bolster the appeal of holding BGT.

Through this flywheel the value flows back to all the stakeholders of the ecosystem – users, validators, and protocols.

The PoL approach positions Berachain as an exciting frontier in the blockchain design landscape.

As this model plays out, we can expect to see a self-sustaining mechanism for the Berchain’s growth and security. It simultaneously rewards users who actively participate and keep their funds within the Berachain ecosystem over an extended period. This could lead to a more democratized form of governance and a deeper sense of community ownership, as users are directly invested in the network’s success. 

The PoL model could very well set a new standard for how blockchains operate and engage with their users, making Berachain a project to watch out for.

???? Closing Thoughts

Berachain’s journey from a goofy NFT collection to an emerging force in the L1 blockchain space is a testament to the power of community in crypto.

In today’s meme-heavy crypto landscape, Berachain has served as a new model for projects that bootstrap their crypto community first before aiming to find product-market fit down the road. It’s certainly an “only in crypto” product phenomenon, albeit one that’s garnered $100M+ in investment from tech investors.

As Berachain gears up for mainnet launch, crypto is watching to see if the Beras can pull it off.