Berachain Fundamental Analysis

Berachain represents a pioneering Layer 1 blockchain, employing a consensus-driven Proof of Liquidity (PoL) protocol that ensures enhanced performance, efficient liquidity management, and seamless integration with the Ethereum Virtual Machine. Constructed using the versatile BeaconKit platform, Berachain equips developers with advanced capabilities for creating cutting-edge decentralized applications.

With a commitment to sustained development, Berachain incorporates numerous intrinsic features that showcase the capabilities and extensive possibilities of its blockchain ecosystem. By blending established technologies with groundbreaking methodologies, Berachain delivers a platform that is flexible, high-performing, and transparent for both users and developers.

Berachain Crypto Platform: Tokenomics

Blockchains with the Proof of Stake (PoS) consensus algorithm typically utilize a management token that secures the network through staking with validators. Such a token typically serves as gas, control, and economic incentives. However, in Berachain Proof of Liquidity model, these functions are shared among multiple tokens.

BERA: Gas Token and Security Foundation

BERA serves two key functions in the Berachain crypto ecosystem:

It is used to pay for transactions on the network, serving as a gas token.

The token is also used for staking to activate validator nodes. The economic value of all staked BERA forms the basic security layer of the chain. On top of this level, additional security is built using the BGT token.

BGT: Management Token

BGT is a non-transferable token that can only be obtained through the provision of liquidity within the Proof of Liquidity. Its main characteristics are:

• The token is earned through performing actions in authorized dApps. This requires providing liquidity incertain pools that have gone through the BGT management whitelist process.

• BGT grants holders the right to participate in the management of the Berachain crypto ecosystem, including the asset whitelist for provisioning and customization of HONEY token issuance rates.

HONEY Token: Backed Stablecoin

HONEY token is a stablecoin soft pegged to the US dollar, with full cryptocurrency backing. It can be used for both standard stablecoin transactions and unique scenarios within the Berachain crypto ecosystem.

The process of minting HONEY token involves several steps:

• The user deposits eligible collateral into specialized smart contracts, HONEY token vaults. Each contract is linked to a specific type of collateral.

• Depending on the type of collateral, individual minting and redemption rates apply.

• After depositing the collateral, the user can mint HONEY token against the collateral provided.

An illustration of the minting process is shown in the diagram below:

Berachain Crypto: Proof of Liquidity (PoL) Model

Berachain implements the groundbreaking Proof of Liquidity consensus mechanism, which bolsters and secures the blockchain by augmenting the liquidity within the system. Proof of Liquidity is a novel advancement on the traditional Proof of Stake model.

The foundation of Proof of Liquidity lies not only in safeguarding the network but also in boosting liquidity to ensure the chain's longevity. This creates a fairer distribution of rewards among the participants, facilitated through Berachain tokens.

Proof of Liquidity integrates essential aspects of the Proof of Stake system, such as the initial allocation of tokens (BERA), adding a governance component through another token (BGT). This structure fosters active engagement from various stakeholders, including validators, liquidity providers, and protocol developers, thereby strengthening their interactions.

Proof of Liquidity Model: Advantages

A primary objective of Proof of Liquidity model is to tackle the limitations of conventional Proof of Stake mechanism, where economic rewards are primarily allocated to validators, resulting in minimal engagement with users and protocols. Proof of Liquidity establishes a mutually beneficial framework where:

• Validators stake BERA to help secure the network.

• Users and liquidity providers earn BGT for their engagement in the ecosystem and for supplying liquidity.

• HONEY token enables liquidity to function as a vital asset for various DeFi applications within Berachain.

In this way, Proof of Liquidity not only fortifies network security but also aligns the economic interests of all stakeholders, fostering a sustainable and liquid ecosystem. By addressing the deficiencies of PoS, Proof of Liquidity contributes to a more balanced, agile, and sustainable environment, encouraging growth among all participants in the Berachain crypto network.

Proof of Liquidity: Key Steps

Proof of Liquidity not only protects the network, but also actively engages participants through the distribution of BERA, BGT and HONEY token. These tokens provide a link between blockchain security, liquidity and economic incentives, making Proof of Liquidity a unique solution.

• Initial gas bond

The validator provides BERA tokens as mandatory collateral to participate in Berachain block creation. All active validators have an equal chance of being selected to offer a block.

• Validator selection and block proposal

One of the active validators is randomly selected to create a new block on berachain.

• Management token reward

A validator is rewarded with BGT management tokens when a block is created.

• Reward distribution

The validator distributes the received BGT tokens to the reward vaults defined through the Berachef smart contract.

• Liquidity provisioning

A Berachain liquidity provider can contribute assets such as HONEY token and BERA to liquidity pools, for example on the BEX platform.

• Receipt tokens

For providing liquidity, a Berachain liquidity provider receives receipt tokens (e.g., HONEY-WBERA) that can be deposited in reward vaults.

• Rewards for liquidity providers

By placing receipt tokens in a rewards vault, the provider becomes entitled to BGT.

• Delegation of BGT to a validator

A Berachain liquidity provider can delegate its BGT tokens to an active validator, reinforcing its status and increasing its rewards.

Berachain Crypto Platform: BeaconKit

BeaconKit is a robust platform crafted to merge the CometBFT consensus algorithm seamlessly with any Ethereum Virtual Machine runtime. This functionality makes BeaconKit an adaptable resource that streamlines the creation of both novel blockchains and dApps rooted in Ethereum technology.

Enhanced by the swift and dependable performance of CometBFT, BeaconKit delivers quick transaction verifications and stability by incorporating tested technologies within the Ethereum Virtual Machine landscape.

BeaconKit: Key Features

• Flexible blockchain customization

Developers can tailor the blockchain to the specific needs of their projects using a basic consensus layer that is easily customizable.

• Integration with Ethereum Virtual Machine clients

Thanks to the API Engine, BeaconKit seamlessly interacts with any Ethereum Virtual Machine client, including Geth, Erigon, Nethermind, and more. This allows existing Ethereum tools and applications to run unchanged, reducing migration time and resources.

• Ethereum standards compliance

BeaconKit supports all major Ethereum standards, including smart contracts and Ethereum Improvement Proposals (EIPs), ensuring compatibility and continuity.

• Modularity

BeaconKit is inherently designed with a modular architecture, giving developers ample opportunity to integrate additional functional layers and customize the Berachain blockchain to meet their needs.

• Customizable blockchain builders

Developers can customize blockchain creation and processing to meet the needs of their applications.

• Tier 2 solution Integration

Layer 2 solutions such as rollups can be integrated to increase scalability.

• Data availability layer

Optimizing data storage and access increases the overall efficiency of the Berachain blockchain by providing higher throughput.

This flexibility makes BeaconKit an ideal choice for both Tier 1 blockchains (new independent networks) and Tier 2 solutions that run on top of existing blockchains.

Importance of BeaconKit

• Transaction acceleration

CometBFT integration enables fast transaction confirmation and finalization, making Berachain more performantthan traditional blockchains.

• Flexibility and modularity

The BeaconKit architecture provides developers with tools to customize key Berachain components for specific scenarios, such as customizing blocks, implementing rollups, or integrating with new storage solutions.

• Reducing barriers for developers

BeaconKit's full compatibility with the Ethereum Virtual Machine allows developers to easily adapt their dApps to Berachain using the infrastructure and tools they already know.

• Supporting the growth of the Berachain crypto ecosystem

BeaconKit's modular approach makes the network ready for expansion, providing resilience to user and application growth and facilitating the adoption of new technologies.

• Innovation potential

The capability to incorporate customizable layers and adopt the most recent advancements in blockchain technology broadens the potential for Berachain, rendering it an appealing platform for both developers and users.

Berachain Crypto: Attracting Investment

Berachain has already attracted significant attention from large venture capital funds and institutional investors from the very start. In a relatively short period of time, the project has managed to raise an impressive $211 million in investments through three funding rounds, which emphasizes the high interest and trust of market players in the Berachain platform. The contribution of such major players to the project not only supports the development, but also provides a wide network of strategic partners.

Investment rounds in Berachain

• Series A Round (April 2023)

During the Series A stage, the Berachain project raised $42 million. The lead investor in Berachain crypto platform was Polychain Capital, one of the most prominent venture capital funds in the crypto industry. This round laid the groundwork for active protocol development and going live on the Berachain test network.

• Funding Round (March 2024)

In March 2024, Berachain completed another funding round, raising $69 million, led by Framework Ventures, known for its strategic investments in blockchain ecosystems.

• Series B Round (April 2024)

Just a month after the previous round, in April 2024 Berachain completed Series B, raising another $100 million. The round was led again by Framework Ventures, which indicates the fund's long-term interest in the project.

Berachain Investors:

In addition to Polychain Capital and Framework Ventures, investors in Berachain include such well-known companiesas:

• Brevan Howard: a leading hedge fund actively investing in crypto assets.

• Tribe Capital: a venture capital firm with a focus on high-tech startups.

• Arrington XRP Capital: a fund known for backing blockchain projects.

• HashKey Capital: one of Asia's largest crypto funds.

• Samsung Next: Samsung's innovation division supporting tech startups.

Berachain Crypto Ecosystem

Berachain is a rapidly growing ecosystem with 235 dApps already in place or planned for launch. Although most of them are not yet fully operational, many have announced their intention to use Berachain to implement their solutions.

Services and solutions in the Berachain crypto ecosystem cover a wide range of areas including:

• Ber Native (Berachain's own solutions)

• DeFi

• RWA

• Bridge and Oracle solutions

• Custody and Security

• Account Abstraction

• Ramps/Payments and Wallets

• GameFi, SocialFi and NFTFi

• BetFi and DAO mechanisms

• Tooling for developers

• Stablecoins

The following projects in the Berachain crypto ecosystem are in the spotlight right now:

• BeraTone is a game project that utilizes GameFi's features to create unique game mechanics.

• GummiFi is a platform that combines the features of BetFi and NFTFi to work with cryptocurrencies.

• InfraredFinance is A RWA-focused financial platform that provides access to tokenized assets.

• KodiakFi is DeFi platform focusing on liquidity and staking products.

The Berachain crypto ecosystem showcases its capabilities through pivotal applications, epitomizing the distinctive advantages of the Proof of Liquidity model and constructed atop bArtio's second test network.

• BeraSwap

This decentralized exchange allows users to swap tokens, contribute liquidity to pools, and engage in managing the ecosystem. The use of the Proof of Liquidity model incentivizes liquidity providers, enhancing the robustness of the network.

• BGT Station

A gateway for handling BGT tokens, this platform enables users to stake, manage liquidity pools, and accrue rewards. Its intuitive interface makes BGT Station a crucial component for interactions within the Berachain crypto ecosystem.

These applications, accessible via bArtio, exemplify potential of Berachain as a versatile and expandable blockchain infrastructure, designed to support both developers and users on the core network.

Future of the Berachain Crypto Ecosystem

With the anticipated mainnet launch, the Berachain crypto ecosystem is set to significantly broaden its functionality and user base. Core native applications such as BeraHub, BeraSwap, and Honey Swap will lay the groundwork for further enhancements, offering users streamlined tools for network interaction.

Outlook of the Berachain crypto ecosystem includes:

• Expansion of applications

The transition from the testnet, which currently hosts 235 applications, to full operational status with the launch of the core network is expected to draw a larger user base and more liquidity, marking a new phase of growth.

• Deepening Proof of Liquidity integration

Native applications will persist in highlighting the distinctive advantages of the Proof of Liquidity, boosting engagement and trust among participants within the ecosystem.

• Expanding new avenues

Securing a presence in sectors like GameFi, SocialFi, NFTFi, and BetFi through the deployment of innovative toolsand applications.

• Enhancing liquidity and security

Augmenting liquidity in pools and bolstering network stability with the expanded use of BGT token and HONEY token.

Berachain is forging a forward-thinking ecosystem where innovation intersects with security, and native applications play a central role in offering users a novel way to interact with blockchain technology.

Berachain's $BERA Launch: Ecosystem Incentives and Distribution Strategy

On February 6, 2025, Berachain officially launched its mainnet and introduced its native token — $BERA. The total token supply is 500 million $BERA, allocated across several key categories:

1. Core Contributors – 84,000,000 $BERA (16.8%)
   Allocated to members of Big Bera Labs, including core developers and advisors who played a pivotal role in building the Berachain infrastructure.

2. Investors – 171,500,000 $BERA (34.3%)
   Reserved for participants in Seed, Series A, and Series B investment rounds.

3. Community – 244,500,000 $BERA (48.9%), subdivided into:

• Airdrop – 79,000,000 $BERA (15.8%)
  Distributed to testnet users, active community members, Berachain NFT holders, dApp developers, and other ecosystem participants.

• Future Community Initiatives – 65,500,000 $BERA (13.1%)
  Reserved for grants, builder support programs, user incentives, and other community-driven initiatives.

• Ecosystem Development – 100,000,000 $BERA (20%)
  Aimed at supporting tech infrastructure, developer resources, node operators, and further enhancements of Proof-of-Liquidity and BeaconKit protocols.

To ensure long-term sustainability and ecosystem alignment, all token categories follow a unified vesting structure:

• 1/6 of tokens unlock one year after the mainnet launch.

• The remaining 5/6 will vest linearly over the following 24 months.

This allocation model is designed to foster ecosystem resilience and long-term value creation.
Significant allocations to the community and developers encourage active participation and innovation within Berachain. The linear vesting mechanism helps mitigate sudden token supply shocks, reducing market volatility and making $BERA more attractive for long-term holders.

As usual, users can get any desired cryptocurrency for fiat or crypto on SimpleSwap.

Summary

Berachain represents a fresh and innovative approach in the blockchain arena, featuring a distinctive Proof of Liquidity (PoL) model and built on the flexible BeaconKit architecture.

The Proof of Liquidity framework is designed to enhance both liquidity and security, fostering a more stable and dynamic environment.

The strategic tokenomics of the Berachain project, which separates functions among various tokens, along with substantial initial investment, fortify its prospects for long-term growth.

However, the practical applicability of the project remains to be demonstrated, and its success will hinge on the effectiveness of its implementation and its adoption in the market.

Future testing phases and the rollout of the Berachain main network are crucial for validating its technological promise and its appeal to developers and users.