Thread by @hmalviya9

Berachain is a mysterious project.

99% of Crypto Twitter has no clue about what they really want to build.

My unfiltered thoughts on Berachain 🧵

DeFi is facing an endless liquidity problem..

New protocols often struggle to attract liquidity, resulting in many new primitives failing and ultimately becoming a ghosted town.

DeFi Liquidity Problem is something very similar to the economic security problem.

Before Eigenlayer, it was super hard to bootstrap economic security for a new web3 service protocol.

Now it's easy because Eigenlayer built a coordination layer that connects ETH validators with web3 service protocols.

Now, ETH validators can directly secure a new web3 service on Eigenlayer, and projects can simply focus on innovation and product design.

The Economic Security problem is basically solved here.

In context to DeFI Liquidity, what if we find a way where liquidity pools on new DeFi apps could directly get liquidity from validators through a staked token pool, and you as a staker could earn rewards in token inflation, trading fees, swap fees, and block capture fees—like a 4x reward boost, simply.

That would be crazy, right?

As a staker, I wouldn't say no to such a reward boost.

And as a DeFi project owner, I would be happy to get my app onboarded to such blockchain infrastructure which is taking care of my liquidity directly through validators.

Berachain is the infrastructure you need to solve the DeFi liquidity problem.

They've built a consensus called Proof of Liquidity where stakers will delegate their staking tokens to validators and earn rewards, and they can only retrieve their staking tokens after they provide liquidity in supported assets in pools

Berachain have 3 tokens

- BGT (Staking, and Governnace token)
- BERA (Gas token)
- HONEY( Stablecoin pegged against USDC)

BGT acts as a staking and governance token in the Berachain ecosystem.

You can't really mint BGT, but you can redeem BERA against BGT.

BGT is a non-transferable token, like an SBT.

The only way to earn BGT is by providing liquidity in the liquidity pools of native DeFi apps on the Berachain ecosystem.

They've 3 native defi apps as of now

- BEX - AMM Based DEX Like Uniswap
- BEND - Lending Protocol Like Aave
- BERPS -Perps DEX like GMX

You need to provide liquidity in any of the assets these dapps support in order to receive BGT as an emission.

Which liquidity pools will receive what percentage of BGT emissions will be decided based on governance.

You'll play a key role in deciding that as a DAO member.

Validators could also bribe you to approve their desired token inflation towards some liquidity pools.

Once you stake your BGT, you could become part of the governance, earn bribes, and at the same time earn token inflation rewards in BGT and capture fees.

As a staker, you could potentially capture fee rewards from BEX, BPerps, BEND, and block capture fees.

You're getting a 4x top-up on your base token inflation reward, and you also have a role to play in deciding how much percentage of token inflation would be allocated to liquidity pools.

Transaction fees on Berachain will be paid in BERA, and Berachain burns 100% of the transaction fees, passing priority fees to validators similar to Ethereum and Polygon.

Berachain is building their own Parallel EVM called Polaris, which will create a gateway for the ETH DeFi ecosystem to onboard onto Berachain.

The whole flywheel around Berachain will effectively work as long as people stay motivated enough to provide liquidity, and they will stay motivated as long as they keep receiving lucrative APR.

Its going to be intresting to see how this whole thing work when the mainnet goes live. I loved the concept, and would love to explore the ecosystem more.

Here are some of the best people you should follow for the research driven content

- @zerokn0wledge_
- @stacy_muur
- @DefiIgnas
- @TheDeFISaint
- @0xMughal
- @ViktorDefi
- @RubiksWeb3hub
- @poopmandefi
- @0xSalazar
- @Only1temmy
- @CryptoKoryo
- @0xTindorr
- @eli5_defi
- @tombheads
- @DistilledCrypto

I hope you enjoyed reading this thread.

If you appreciate my work, please like, share, and repost the tweet below

https://x.com/hmalviya9/status/1787807958203572268

don't forget to check out this thread on berachain by @satyaki44 too.

https://x.com/satyaki44/status/1787831297773121675