Key Takeaways
- Protocol overview: Infrared (IR) is a Berachain liquid staking and PoL infrastructure protocol built around iBGT, iBERA, validator infrastructure, and vaults.
- Liquid products: Infrared’s main liquid products are iBGT, a liquid wrapper for BGT earned through Infrared vault deposits, and iBERA, a liquid staking token for BERA.s.
- Flywheel growth: Infrared’s model makes BGT and staked BERA more composable, creating new liquidity, staking, and incentive loops across the Berachain ecosystem.
- Ecosystem impact: The continued growth of the Berachain and Infrared ecosystems promotes deep liquidity and protocol-owned assets, while aligning incentives across users and existing protocols.
- Flexible strategies: Infrared gives users and protocols more ways to interact with PoL rewards, validator incentives, iBGT, iBERA, and IR/sIR staking.
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How Berachain Proof of Liquidity Works
As a solution to the many inefficiencies of Proof of Stake (PoS) blockchains and the unbalanced economic incentivization structures of these chains, Berachain uses Proof of Liquidity (PoL), a rewards mechanism designed to align validators, users, and ecosystem projects.
Specifically, Proof of Liquidity is designed to benefit all ecosystem participants that make use of Berachain by distributing network-level incentives in a synergistic manner to all platform users. These include network validators, delegators, protocols/applications building on the chain, and liquidity depositors/users of the protocol.
Two core Berachain tokens support this model: BERA, the network gas and validator staking token, and BGT, the non-transferable governance and rewards token distributed through PoL.
BGT is earned y performing eligible on-chain actions in dApps with whitelisted Reward Vaults. Most commonly, this involves providing liquidity, receiving a receipt token, and staking that receipt token in a Reward Vault.
This means BGT cannot be bought on the open market and therefore incentivizes users to continue to use Berachain ecosystem dApps. Today, BGT rewards flow through Reward Vaults: smart contracts where users stake PoL-eligible assets to earn BGT. Only governance-approved Reward Vaults are eligible to receive BGT emissions from validators.
Typically, a user interacts with a Berachain dApp, receives a receipt token for the eligible activity, and stakes that asset in a Reward Vault. Through Infrared, eligible deposits can earn iBGT exposure tied to the BGT generated through Infrared vault activity.
BGT plays a critical role in governance and emissions. BGT holders can vote on governance proposals or delegate voting power to another address, while validator boosting is a separate mechanism that influences validator emissions and incentive flows.
This design helps allow for the continued flow of users to applications/protocols built on top of Berachain helps bootstrap the success of their endeavors by providing them with regular users and liquidity. Thus, the Proof of Liquidity model benefits all network participants by incentivizing each participant role on a continuous basis.
What Is Infrared Finance? Berachain Liquid Staking, iBGT and iBERA
Infrared is a liquid staking and PoL infrastructure protocol built on Berachain. Originally one of the early projects incubated through Berachain’s Build-A-Bera program, Infrared now supports Berachain users and protocols through PoL vaults, iBGT, iBERA, validator infrastructure, and IR/sIR governance mechanics.
Infrared has become one of the core liquid staking and PoL infrastructure protocols in the Berachain ecosystem. Essentially, Infrared is designed to complement Proof of Liquidity by helping users, protocols, and applications access Berachain’s PoL system through liquid products, vaults, and validator infrastructure.
This is accomplished by providing the means for users to deposit liquidity through various Infrared vaults (liquidity pools). Infrared’s core liquid products are iBGT and iBERA. iBERA is a BERA liquid staking token backed 1:1 by BERA staked with Infrared’s validator set, while iBGT is a liquid wrapper backed 1:1 by BGT earned through liquidity deposited into Infrared vaults. Importantly, iBGT is not redeemable for BGT and only earns associated rewards when deposited in the relevant Infrared vault.
iBGT makes otherwise non-transferable BGT exposure more composable, allowing holders to use iBGT in supported Berachain DeFi venues or deposit it into Infrared’s vault to earn associated rewards.
For example, if a BERA/HONEY pool on a Berachain venue such as BEX is approved for BGT emissions, users can provide liquidity, receive a receipt token, and stake that asset in the relevant Reward Vault. Infrared can then abstract part of this flow through its vaults and iBGT mechanics.
In the background, the BGT earned from deposits is used to stake and run the Infrared validator set, positioning Infrared as a key actor in Berachain’s governance and a significant influence over BGT emissions. This influence now connects to Infrared’s IR and sIR system, where IR is the native governance token and sIR represents staked IR.
How the Infrared Emissions Flywheel Works
The presence of deep liquidity is pivotal to the success of any DeFi project. Therefore, it is crucial for all projects building on Berachain to strive to build up Protocol Owned Liquidity in their treasuries to ensure their project’s liquidity isn’t short-term capital and to encourage continued treasury growth.
Projects with Protocol Owned Liquidity can seek Reward Vault approval so their eligible assets can receive BGT emissions from validators. This is largely realized via Infrared’s emissions flywheel. Once a Reward Vault is approved through Berachain governance, validators can direct BGT emissions toward it, and users staking the eligible asset can earn a share of those BGT rewards. iBGT offers a yield bearing liquid asset for their treasury, while IR gives users and protocols access to Infrared governance and staking mechanics. When staked as sIR, it represents a proportional claim on the IR staking vault, where protocol revenue can be converted into IR and added to the vault.
Protocols have a clear incentive to attract validator emissions toward their Reward Vaults, because BGT rewards can help deepen liquidity and attract users.
IR and sIR are the current governance layer for Infrared. Protocols and users can stake IR to receive sIR, which ties governance participation and fee-aligned staking into Infrared’s broader PoL strategy. By making use of Infrared’s token bribes (a system that incentives users to delegate their BGT to a specific validator within the set), protocols strive to incentivize Infrared validators to direct emissions to their pools. Next, these bribes are directed to Infrared’s token holders. This means that when protocols accumulate larger positions of Infrared’s token, they receive a proportional amount of their individual bribes back (meaning the more Infrared token they hold, the higher their incentivized rewards) via their existing Infrared token holding. In this way, the Infrared flywheel is realized.
Infrared Flywheel: Increasing Adoption and Benefiting Users
By leveraging the synergistic relationship realized via the Infrared flywheel effect, users and protocols can benefit. The system streamlines how protocols operating on Berachain offer deep liquidity to increasingly benefit users by providing them with more confidence and flexibility in the platforms they choose to interact with.
Moreover, by enabling projects to build and more easily maintain robust treasuries, projects may be better positioned to maintain long-term liquidity and incentive alignment.
This renewed confidence and increased stability helps eliminate the potential negative consequences that could result in the absence of these critical elements within any DeFi protocol. Finally, Infrared gives users and protocols additional ways to access PoL rewards through iBGT, iBERA, IR/sIR staking, and supported Berachain DeFi integrations.
For these reasons and others, as the Infrared ecosystem grows, its strong position as an aggregator for staking and governance power through iBGT will allow the protocol to become a foundational platform within the larger Berachain 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.
