So, you've heard some hearsay in the crypto jungle about something called "Berachain." Perhaps you saw some bear memes floating around. But what is it really, and why should you care as a new entrant to this wild crypto world?
Berachain isn't just another blockchain, it's a new kind of ecosystem built to make DeFi more accessible, rewarding, and user-friendly. Let's dive in!
Key Takeaways
- Berachain is a new community-centric Layer 1 blockchain designed specifically for DeFi.
- EVM-compatible, built with modular architecture for flexibility and friendliness to developers, ready for connectivity with other blockchains.
- Based on a new "Proof-of-Liquidity" system, Berachain incentivizes all participants to maintain a certain level of liquidity.
- Berachain has a distinctive multi-token model, designed to ensure equity and sustainability.
- Project has raised $142 million from top investors in the industry - a clear vote of confidence in its vision and tech.
- Berachain comes from the NFT project, so it has a very strong and passionate community.
What is Berachain?
Now, imagine an entirely new kind of blockchain: one that allows the DeFi world to be much more accessible and rewarding for all. Well, that is what Berachain is. It's built with the user in mind, on top of a very smart system that is quite different from older blockchains.
Berachain doesn't rely on cumbersome mining processes or the locking up of large sums of tokens, instead, it employs something called Proof-of-Liquidity. Think of it this way: you help to keep the system going smoothly by providing liquidity, receiving some pretty attractive rewards in return.
Berachain is designed in such a way that it can easily be connected with other blockchains. It's built with innovative framework BeaconKit and EVM-compatible - which is a fancy way of saying developers used to building applications on Ethereum will find it super easy to build on Berachain too, or run Ethereum-based applications without rewriting any lines of code. That means more exciting projects and applications should appear in the ecosystem, and that is great news for all participants of DeFi.
But it is so much more than this technology. Ultimately, it is about community and ecosystem that allows you to be involved in the really big decisions regarding the future of the platform. In fact, a great deal of what makes Berachain, so special involves this very principle of community.
Berachain's Story: From NFTs to a DeFi Revolution
Berachain actually started, well, in a bit of an unusual place: the world of Non-Fungible Tokens, or NFTs. A collection called Bong Bears, created at the end of 2021 by a group of anonymous developers, gained an extremely passionate following-except it wasn't just another NFT project. It was the seed of a great community.
But its creators, including Smokey the Bera and Dev Bear, realized it could be something much more significant. Imagining a game-changing DeFi blockchain, that became Berachain. They began developing the idea and released an early test version of the platform in early 2024. That got the attention of big investors, and Berachain managed to raise a substantial $142 million in funding - a great vote of confidence in their vision.
What really makes Berachain's story compelling is its organic growth, powered by a very dedicated community that refers to themselves as the "Beras", known for their strong community spirit and their love of bear-themed memes. This vibrant community is a big part of what makes Berachain stand out. It's, therefore, a proof that such guys, driven by their passion, can move the crypto world and succeed in transforming a simple NFT collection into a leading DeFi platform. Now, the valuation of Berachain exceeded $420 million.
Find out more about Berachain’s history, background and use cases in our blog post:
Berachain (BERA): Redefining Liquidity Accrual for DeFi
What Makes Berachain Special? Built Different with CometBFT and EVM
What makes Berachain stand out is its peculiar technical ground: modular and interoperable base, ready to connect with the wider blockchain universe. But Berachain's EVM-identity is really something else. We are not talking about mere compatibility here, Berachain mirrors Ethereum's execution environment. This allows developers to easily deploy existing Solidity smart contracts and utilize familiar tools like Geth and Nethermind, while still benefiting from the capabilities on Ethereum. Berachain automatically inherits all of Ethereum's upgrades.
Powering this seamless experience is BeaconKit, a modern framework that weaves CometBFT seamlessly with any EVM execution environment. It offers perfect EVM identity with the Engine API and provides very substantial performance improvements. Think single-slot finality and 40% faster block times courtesy of parallel execution. Built for extensibility, BeaconKit features a modular architecture supporting custom block builders, rollup layers, and data availability solutions. This flexibility is a footing for both L1 and Layer 2 implementations and lays the bedrock for a forward-looking architecture, placing Berachain in a powerful position to be future-proof for the next generation of DeFi and beyond.
Why is Berachain Different? The Proof-of-Liquidity Advantage
Traditional Proof-of-Stake blockchains often create a division between those securing the network through validation and the projects built on top of them in the form of dApps, with users further down the line. Berachain hopes to fix this with its innovative Proof-of-Liquidity (PoL) system, designed to make DeFi more rewarding all round by focusing on liquidity.
It has three core tokens that keep everything in motion:
$BERA: the fuel that keeps Berachain running. You can use it to pay for transactions.
$BGT: very special token that you can only have by providing liquidity. Use it to vote for any decision about Berachain. You can stake BGT on validators and swap it on an 1:1 ratio for BERA.
$HONEY: a native stablecoin, soft-pegged to the U.S. dollar, collateralized by a very diverse pool of assets, and, most importantly, governed by the community to ensure stability.
PoL: A Win-Win-Win for Users, Validators, and dApps
How Proof-of-Liquidity Works:
- Validators stake $BERA tokens to earn block production rights. If selected, validators are rewarded $BGT for securing the network, which they distribute to Reward Vaults.
- You, being a regular user, participate in pools providing liquidity and receive special receipt tokens.
- Afterward, you stake these receipt tokens to Reward Vault, which makes them eligible to get $BGT.
- Later on, you can delegate earned BGT back to the validators, boosting their future rewards.
- In addition, protocols can incentivize Validators to start directing rewards to them by offering Incentives in return for the $BGT rewards that get directed to their particular Reward Vault.
In brief: Validators are incentivized with $BGT for securing the network and distribute it to users who provide liquidity to projects they see value in. Projects compete for validator support, users will support validators that distribute rewards to the project they are interested in, and everyone enjoys the spillover effect into a more lively and rewarding ecosystem.
Why Should You Care? The Potential of Berachain
Berachain is trying to solve some of the most critical problems in DeFi today. Here is why these improvements matter to you:
Less Scattered, More Efficient
Nowadays, DeFi is a bit like some scattered shops around, it's hard to find what you need. Berachain aims to gather all the essential building blocks of DeFi into one place, making it more convenient and efficient. This could also mean lower fees and better access to a wide range of financial services.
Correct Incentivization
Most blockchains give the majority of rewards to those securing the network, validators, while the value in the ecosystem is created by the projects (dApps) and their users. Berachain changes this by directly rewarding projects for attracting liquidity. More support for innovative projects - better returns for you as a user.
Easier for Developers
Berachain is designed to be super compatible with Ethereum, the most popular platform for DeFi projects. What this means is that it will be easy for developers to migrate their existing projects to Berachain or to create new projects without needing to invest time in learning an entirely new system. More projects translate to more choices and opportunities for you.
Addressing these core challenges, Berachain attempts to form a new basis for DeFi in which network security, capital efficiency, and application development complement each other in harmony to drive sustainable growth.
Is Berachain Right for You?
Berachain represents another take on what DeFi is supposed to be: more collaborative, rewarding, tight-knit with community support, and innovatively managing its token economics.
If you're intrigued by the thought of a community-focused project actually tackling some of DeFi's biggest challenges, then Berachain could be your cup of tea.
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.
