What is Berachain, Revolutionizing Blockchain with Proof of Liquidity
Images of Berachain, Revolutionizing Blockchain

Let’s first understand what Berachain is. It is one of the pioneering EVM-identical Layer 1 blockchain that makes use of a unique Proof-of-Liquidity consensus mechanism. This design separates the gas tokens from governance tokens, and that, in turn, helps improve liquidity within decentralized finance applications. By introducing PoL, Berachain encourages users to provide liquidity while keeping the validator and the project relationship symbiotic in its ecosystem.

Important Features

  • Layer 1 Blockchain: Cosmos SDK-based Berachain blockchain, which allows for fast finality of transactions, with low fees, and is scalable while being modular networks
  • Two-Tiered Token System: Two Tier1 tokens are deployed on the platform: BERA which acts as gas fees and a governance token called BGT, which is also a soulbond token
  • Public Testnet: Berachain is now in the public test net phase but is expected to publicly launch the mainnet in late 2024
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Proof of Liquidity

As a traditional PoS blockchain, it locks the tokens of validators into their stake during block validation. However, such a mechanism severely hampers network liquidity. Berachain solves this problem, by introducing staking assets while using them in several other DeFi protocols. This functionality was demonstrated as part of the bArtio B2 test net launched on June 9, 2024.

How Berachain works

Berachain utilizes a modular architecture with BeaconKit to help guarantee an EVM-identical execution environment and support building upon the Ethereum-based protocol. The PoL consensus mechanism enhances staking processes and rewards distribution without jeopardizing the multi-token architecture that separates security and governance for a stronger economic structure.

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Berachain Tokens

Berachain operates on a multi-token economy:

  • BERA, It is the native gas token, used for transaction fees and staking for BGT.
  • BGT, Governing token, non-transferable, issued on staking BERA or other accepted assets. Validators receive BGT emissions on validating blocks, but cannot draw them off.
  • HONEY, Stablecoin soft-pegged to the US dollar and in use within the Berachain ecosystem; minted through a smart contract referred to as vault router.

Native dApps

Berachain has several native dApps, among which are:

BEX: A DEX, using liquidity pools for requested trades.
BEND: A money market for securing stablecoin loans using crypto assets.
BERP: A perpetual trading platform utilizing HONEY as the base token.

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Berachain’s innovative PoL consensus mechanism reconciles security and liquidity, marking a departure from traditional PoS systems. As it advances through its test net phase, Berachain presents exciting opportunities for user engagement, though potential investors should conduct thorough research before committing to any protocols.

To Read More: Finance

By Salaar Shah

Salaar Shah is the Professional and Dedicated Content and Article Writer. he has been carrying out content writing for 10 years and devoting his experience in covering all kinds of news, national and international and entertainment.

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