Berachain, Defi Innovation Or Just A Memechain?

Berachain is a new blockchain with native dex, and perps platform that is capital-efficient and has the deepest liquidity pools. It is a purpose-built layer-one chain for Defi. We will divide the article into the following points to make it easier to understand:

➖ The problem solves

➖ Proof of liquidity

➖ Ecosystem tokens

➖ Dex & perpetual exchange

The problem solves

There’s a lot of money moving around on different chains right now and some of it is not being used productively. This can cause problems for the people and projects that are using that money because it can disappear quickly. Berachain is designed to keep money moving around and to make it more productive so that people will want to stay on the chain.

Proof of liquidity

The Bera team has created a new type of consensus that allows users to stake multiple assets (like ETH, BTC, or stablecoins) to a validator. This allows the validator to provide liquidity on the chain’s native virtualized AMM. The team has confirmed that at the start, the weighting of the block rewards will be directed towards the major L1 tokens. However, over time the chain may be secured by existing or new defi protocols tokens on Berachain. This opens up the possibility of using gauges to determine the weighting of block rewards for specific assets.

Ecosystem tokens

⚫ BERA: The Gas Token

⚫ HONEY: The Stablecoin

⚫ BGT: The Governance Token

BERA will be the gas token of the chain, so there is no need to explain much about it, so in this section we will focus on the tokens HONEY and BGT.

The Bera Chain has a strong PSM (CDPs, Perp Funding Rates), meaning it is decentralized and not largely backed by centralized assets. It is also liquid, meaning each asset trades through HONEY on the Berachain AMM. The BGT is the Bera Governance Token, which is a nontransferrable NFT that is reserved for long-term aligned users. The only way to get the BGT is to stake your BERA. TheB GT holders will also have a say in determining new stakable assets and directing BERA emissions.

Dex & Perpetual exchange

Berachain’s native dex is a digital exchange that will use the technology built by CrocSwap to offer a more advanced AMM engine. This will improve liquidity, pricing, and reduce transaction costs.

The perpetual exchange is a place where users can stake an asset and then mint HONEY as a loan to trade. All funding rates are paid in HONEY, which act as a secondary peg mechanic. This reduces the likelihood of users removing their staked capital because they can do everything they need on the chain while continuously securing the network.

In summary, it seems that Berachain is trying to build a product that incentivizes users to keep money in its chain thanks to a series of interconnected mechanisms that make the chances of maximizing their returns greater, rather than just gambling in the short term. The question is, will this be enough to build a chain attractive enough for users?