Are you interested in Berachain? This blockchain is indeed one of the most revolutionary inventions entering into the DeFi sphere, and an essential part of its secret is a unique tri-token system that means three interlinked tokens, each carrying out a different mission. Let's meet the Bera-family: $BERA, $BGT, and $HONEY!
Key Takeaways
- Berachain has three core tokens: $BERA for gas, $BGT for governance, and $HONEY for stability.
- Unlike many governance tokens, $BGT can only be earned by contributing to Berachain's liquidity, not bought.
- As a $BGT holder, you can influence decisions and shape the future of the Berachain ecosystem.
- $HONEY is a stablecoin designed for everyday use within Berachain and backed by a secure collateral system.
- Proof-of-Liquidity connects it all: Berachain's unique system ties together the three tokens, rewarding users for contributing to a healthy and liquid ecosystem.
If you're interested in Berachain, explore our dedicated section filled with blog posts and comprehensive guides: https://daic.capital/blog/category/Berachain
Berachain's Tri-Token System
At the heart of Berachain's innovative approach to DeFi is the Proof-of-Liquidity mechanism, and driving this system is a tri-token model: $BERA, $BGT, and $HONEY. By separating the functions of gas, governance, and a stable medium of exchange respectively, Berachain wants to offer a more balanced ecosystem that is rewarding for all participants. Let's explore each token and how they contribute to the Berachain ecosystem.
$BERA: Keeping the Lights On
$BERA is the fuel for the Berachain engine. Every time you do anything on Berachain, whether it is swapping tokens on BeraSwap or using one of many cool "bear" dApps, you are going to have to pay a tiny fee in $BERA. This is a so-called "gas" token, it is vital in keeping the network running smooth.
$BERA isn't just about fee provision. It's also used by validators, the participants, who keep the Berachain network secure. They "stake" their $BERA, that means locking it up as a way of showing they are committed to keeping things honest. In general, a validator's chance of being chosen to add new blocks to the blockchain increases with the amount of $BERA staked.
Where does $BERA come from?
The initial supply of $BERA at launch is 500 million tokens. These tokens were distributed to the core team and advisors, investors, and a large portion was set aside for the community and future development.
To encourage long-term commitment from these groups, their $BERA tokens are subject to a vesting schedule. This means they don't get access to all their tokens right away. The rest of the tokens, after the one-year cliff, will be gradually released over two years.
Berachain has an inflationary model for $BERA, with new $BERA tokens being created over time, mainly through the $BGT emissions. It's carefully managed to further the long-term growth and security of the network. The approximate inflation rate is 10% annually, but might be adjusted by community governance.
$BGT: The Token You Earn, Not Buy
That is where things are going to be interesting. Berachain's governance token, $BGT, cannot be merely purchased over an exchange, it has to be earned. This may sound weird, but that's a part of what makes Berachain so great: only people who actually contribute to the ecosystem get a say in how it's run.
How to earn $BGT token?
By participating in Berachain's Proof-of-Liquidity system! This usually means providing liquidity to dApps with whitelisted Reward Vaults. For example, you can add your tokens to a liquidity pool on BeraSwap and, in return, you'll get special receipt tokens that you stake in a "reward vault" to earn $BGT.
You can also borrow $HONEY on platforms like BEND to become eligible for $BGT rewards. This is a prime example of how Berachain's Proof-of-Liquidity incentivizes different kinds of participation in the ecosystem.
Once you've earned some $BGT, you can use it to "boost" your favorite validators. Think of it as giving them a thumbs-up for their work securing the network. This not only helps them earn more, but you'll also get a share of their rewards in return, plus a cut of the fees from core Berachain dApps.
And if that's not enough, your $BGT also gives you voting power on governance proposals, letting you directly influence the future of Berachain – all managed through BGT Station. It's your one-stop-shop for earning, boosting, and governing! If you ever need more $BERA, you can "burn" your $BGT to get it back at a 1:1 ratio.
Check out our blog post “How to Earn $BGT on Berachain: Your BeraSwap Liquidity Guide”, if you want to find out more details about BGT earning.
$HONEY: Your Stable and Reliable Friend
$HONEY is the native Berachain stablecoin soft pegged to the US dollar value. As it has been mentioned, it is thus very convenient for all real-life scenarios happening within the context of the whole Berachain blockchain. You can use it on dApps like BEND for lending and borrowing, or on BERPS for leveraged trading.
You can get $HONEY by minting it in exchange for other popular stablecoins on the Honey Swap dApp – it's like exchanging one currency for another. Alternatively, $HONEY can be obtained by swapping from other assets on BEX or another decentralized exchange.
$HONEY is designed to be extra reliable because it's backed by a variety of these assets, managed by a smart system, and overseen by the community through governance.
$BERA, $BGT, and $HONEY are not just three different tokens, they complement one another in action. The Proof-of-Liquidity model of Berachain connects them all together, creating such a system where everyone benefits by contributing to the growth of the network. This is really unique and makes Berachain one of the most exciting projects to watch in the DeFi space! As you go deeper, it will be pretty apparent how these three tokens create a very dynamic ecosystem.
The information provided by DAIC, including but not limited to research, analysis, data, or other content, is offered solely for informational purposes and does not constitute investment advice, financial advice, trading advice, or any other type of advice. DAIC does not recommend the purchase, sale, or holding of any cryptocurrency or other investment.
