Berachain: Exploring the Ecosystem

Introduction: A New Paradigm in Layer-1 Blockchain Design

Berachain is a high-performance, EVM-identical Layer-1 blockchain that introduces Proof-of-Liquidity (PoL)—a novel consensus mechanism that integrates liquidity incentives at the protocol level. Unlike traditional Proof-of-Stake (PoS) chains, which primarily focus on network security, Berachain ensures capital efficiency by allowing liquidity and security to align in tandem.

The result is a blockchain ecosystem where economic incentives benefit validators, applications, and users simultaneously—reshaping how Layer-1 networks operate and distribute value.

Origins of Berachain: From NFT Experiment to Ecosystem

The journey of Berachain began as a fun NFT experiment by co-founders Papa and Smokey the Bera. While immersed in DeFi Discords, they launched a collection of bear-themed NFTs, which, in a humorous twist, were referred to as “Beras” instead of “Bears.” This playful meme eventually became the foundation for Berachain’s identity.

However, while engaging with other blockchain enthusiasts, the founders noticed a fundamental issue with emerging Layer-1 chains. Multiple projects were securing billions of dollars in staked assets, yet these chains lacked deep liquidity for actual transactions and applications. This led to a key realization: what’s the point of a secure network if no one uses it?

Inspired by the rise of liquid staking and protocols like Lido and EigenLayer, the Berachain team set out to create a blockchain where liquidity and security reinforce each other at the consensus level. This idea led to the development of Proof-of-Liquidity (PoL).

The Problem: Capital Inefficiency in Traditional PoS Chains

Most Layer-1 blockchains follow a simple yet inefficient model:

• Users stake assets to secure the network.

• However, these staked assets remain locked and illiquid, limiting economic activity.

• Security is prioritized, but there is no direct mechanism to encourage liquidity provisioning at the protocol level.

Berachain solves this inefficiency by integrating liquidity incentives directly into Proof-of-Liquidity (PoL), allowing validators, applications, and liquidity providers to be financially aligned.

Berachain’s Solution: Proof-of-Liquidity (PoL)

What is PoL?

Proof-of-Liquidity is an enhanced version of Proof-of-Stake, where staking is not only used to secure the network but also to incentivize liquidity and application growth. This is accomplished through a dual-token system that governs network incentives:

1. $BERA – The gas token that secures the network and is staked by validators.

2. $BGT – The non-transferable governance and reward token that dictates emissions and aligns incentives.

Through PoL, validators, users, and applications actively influence network incentives instead of passively staking tokens.

Core Components of PoL

Security Layer – $BERA

Validators participate in consensus by staking $BERA. The Active Set of validators is determined based on the amount of $BERA staked, with a minimum stake of 250,000 $BERA and a cap of 10,000,000 $BERA.

The probability of a validator proposing a block is proportional to their staked $BERA amount. More $BERA staked means a higher likelihood of proposing a block, similar to Ethereum’s PoS model.

Reward Layer – $BGT

Unlike traditional PoS, validators do not automatically receive block rewards based on their stake. Instead, $BGT governance tokens determine the size of rewards. Validators receive a "Boost" when $BGT holders delegate their tokens to them, increasing their share of block emissions.

This creates a competitive market where validators must attract $BGT delegations to maximize rewards rather than simply staking the most tokens.

The Berachain Ecosystem: Driving Adoption Through Applications and Innovation

While Berachain’s Proof-of-Liquidity model is innovative, the real strength of the network lies in its growing ecosystem of applications, projects, and infrastructure providers that make it a thriving hub for DeFi, NFTs, gaming, and beyond.

Build-a-Bera: Catalyzing Innovation

Build-a-Bera is a results-driven incubator aligned with the Berachain Foundation, providing early-stage projects with funding, mentorship, and infrastructure to thrive in the competitive blockchain space. By fostering ecosystem growth, Build-a-Bera ensures that new ideas translate into viable, high-impact applications on Berachain.

Notable projects incubated by Build-a-Bera include:

• Gummi: A next-gen trading platform with an attached money market that supports a wide range of assets, including ERC-20s, NFTs, and ERC-404s, offering leverage trading.

• Kodiak: A foundational liquidity hub on Berachain, focused on modularity and extensibility to create an advanced swaps venue.

• Shogun: A protocol that leverages intents across modular blockchains like Berachain, Solana, and other EVM chains to convert MEV (Miner Extractable Value) into TEV (Trader Extractable Value), optimizing efficiency for traders.

Other Key Projects in the Berachain Ecosystem

• Dolomite: A next-generation lending protocol designed to support a broader range of assets compared to traditional lending platforms.

• Honey Chat: A Berachain-native social platform transforming engagement into economic value, creating a true SocialFi experience.

• Ooga Booga: Berachain’s premier liquidity aggregator, ensuring efficient asset swaps across the ecosystem.

• Origami: An automated leverage layer for DeFi, integrating with third-party lenders to enable capital-efficient yield strategies with minimized liquidation risk.

Infrared

Infrared is a core infrastructure project that abstracts the complexities of participating in Berachain's PoL mechanism. The protocol provides liquid staking solutions for $BGT and $BERA, offers yield-optimized vaults, and operates network validators. Luganodes has worked closely with Infrared as a top tier infrastructure provider.

Key offerings include:

• $iBGT: A liquid wrapper for $BGT that allows users to stake and utilize rewards across DeFi platforms.

• $iBERA: A liquid-staked version of $BERA, enabling users to maintain liquidity while earning staking rewards.

We are pleased to announce our partnership with @InfraredFinance, the team building cutting-edge infrastructure around @berachain’s Proof of Liquidity (PoL) mechanism.

The validator we’re operating for Infrared is now Rank #1 on Berachain! 🏆

Infrared is transforming the… pic.twitter.com/WCyfS2BjBN

— Luganodes (@luganodes) February 24, 2025

Gaming and NFTs: Expanding Berachain’s Reach

Beyond DeFi, Berachain supports a vibrant ecosystem of gaming and NFT projects:

• BearTone: A multiplayer farming role-playing game where players build farmsteads, manage livestock, and craft artisanal goods.

• Beramonium Chronicles: An NFT-driven game where players equip their "Beras" with in-game assets, complete missions, and earn rewards.

• Bera Punks: A Berachain-native NFT collection available on Magic Eden, allowing users to trade and showcase unique digital assets.

Infrastructure and Core Protocol Components

• BeraHub: The central hub for managing $BGT, accessing liquidity pools, and boosting validators with governance tokens.

• BeraScan: The blockchain explorer and analytics platform for Berachain.

$HONEY: Berachain's Stablecoin

$HONEY is Berachain’s native stablecoin, collateralized and soft-pegged to the US dollar. It can be minted through collateralized vaults or obtained via swaps on Berachain’s decentralized exchange, BEX.

• Honey Swap: Facilitates liquidity provision, allowing users to earn $BGT rewards while utilizing $HONEY.

• HoneyFactory: The smart contract responsible for minting $HONEY, managing different vaults and collateral types.

Conclusion: A Thriving Ecosystem Built for Growth

Berachain is more than just an innovative blockchain—it is a rapidly expanding ecosystem with thriving applications across DeFi, gaming, and NFTs. By aligning liquidity incentives with network security, Berachain fosters a self-sustaining environment where validators, applications, and users benefit together.

As new projects continue to emerge within the Berachain ecosystem, its vision of a capital-efficient blockchain is becoming a reality. Whether through liquid staking, token launches, gaming, or NFT marketplaces, Berachain is positioning itself as a leading Layer-1 blockchain with a strong focus on real-world usability and economic sustainability. 🐻⛓️

About Luganodes

Luganodes is a world-class, Swiss-operated, non-custodial blockchain infrastructure provider that has rapidly gained recognition in the industry for offering institutional-grade services. It was born out of the Lugano Plan B Program, an initiative driven by Tether and the City of Lugano. Luganodes maintains an exceptional 99.9% uptime with round-the-clock monitoring by SRE experts. With support for 45+ PoS networks, it ranks among the top validators on Polygon, Polkadot, Sui, and Tron. Luganodes prioritizes security and compliance, holding the distinction of being one of the first staking providers to adhere to all SOC 2 Type II, GDPR, and ISO 27001 standards as well as offering Chainproof insurance to institutional clients.

The information herein is for general informational purposes only and does not constitute legal, business, tax, professional, financial, or investment advice. No warranties are made regarding its accuracy, correctness, completeness, or reliability. Luganodes and its affiliates disclaim all liability for any losses or damages arising from reliance on this information. Luganodes is not obligated to update or amend any content. Use of this at your own risk. For any advice, please consult a qualified professional.