Upcoming layer 1 blockchain Berachain opened its testnet to the general public Thursday, a debut for its “proof of liquidity” consensus mechanism that garnered $42 million in funding final 12 months.
Berachain is a meme-fueled mission constructed within the Cosmos ecosystem. Its creators are largely pseudonymous crypto builders who determine themselves on-line with photos of cartoon bears – some smoking weed.
That did not cease the likes of Polychain Capital from investing of their imaginative and prescient for a brand new sort of blockchain. Underneath the hood, it is powered by a recent tackle the favored “proof of stake” mannequin for securing blockchains referred to as “proof of liquidity,” or PoL.
Underneath PoL, ecosystem gamers assist safe the Berachain community by offering liquidity to the buying and selling infrastructure constructed on high of it. Infrastructure can imply many issues: an automatic market maker, a crypto sport, a lending protocol – mainly something that wants a pool of user-supplied tokens to facilitate transactions by way of good contracts.
It is common in decentralized finance (DeFi) for these protocols to reward their liquidity suppliers (LPers) with a token. That is the plan for Berachain, too. Any protocol that is handed a Berachain governance vote will get BGT to provide to their LPers.
These BGT tokens are the governance tokens for Berachain, that means its holders have energy over the community. Notably, the tokens are additionally illiquid; you possibly can’t purchase or promote them. The one strategy to get them is by incomes them as a reward, Berachain cofounder Smokey the Bera advised CoinDesk.
“Berachain is the primary chain that is constructed to drive worth to protocols,” Smokey mentioned in a Telegram message.
The token’s creators plan for it to have some financial worth. Any BGT holder will be capable of burn their belongings in trade for the equal quantity of BERA tokens, which shall be tradeable. Or, they’ll delegate their BGT to others in trade for the Berachain stablecoin referred to as HONEY, which Smokey mentioned shall be backed by USDC.
This setup would not guarantee Berachain shall be fully immune from financial whales. Whereas “you possibly can’t simply purchase the staking token,” massive bag holders might nonetheless purchase a number of BERA, present it as liquidity to buying and selling protocols and obtain outsize BGT, and the ability they maintain, Smokey mentioned.
Nonetheless, it is a way more lively model of “proof of stake” than merely lending one’s tokens to a validator. Underneath Berachain, the protocols themselves obtain the liquidity of all of the customers in search of financial returns.
The liquidity bootstrapping permits Berachain “to perform extra with much less preliminary assets,” Smokey mentioned. That might be an necessary distinction given the variety of new layer 1 blockchains rolling out and being introduced.
Berachain is positioning itself to enchantment to the Ethereum crowd in addition to Cosmos builders, Smokey mentioned. It is already been in a personal testnet for a few month and has greater than 30 native groups, plus dozens extra protocols from different ecosystems which are getting ready to roll out variations of their mission on Berachain.
