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 yr.
Berachain is a meme-fueled venture constructed within the Cosmos ecosystem. Its creators are largely pseudonymous crypto builders who establish themselves on-line with footage 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. Below the hood, it is powered by a contemporary tackle the favored “proof of stake” mannequin for securing blockchains referred to as “proof of liquidity,” or PoL.
Below PoL, ecosystem gamers assist safe the Berachain community by offering liquidity to the buying and selling infrastructure constructed on prime of it. Infrastructure can imply many issues: an automatic market maker, a crypto sport, a lending protocol – principally 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 offer 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 option to get them is by incomes them as a reward, Berachain cofounder Smokey the Bera informed CoinDesk.
“Berachain is the primary chain that is constructed to drive worth to protocols,” Smokey stated 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 change for the equal quantity of BERA tokens, which shall be tradeable. Or, they’ll delegate their BGT to others in change for the Berachain stablecoin referred to as HONEY, which Smokey stated shall be backed by USDC.
This setup does not guarantee Berachain shall be totally immune from financial whales. Whereas “you possibly can’t simply purchase the staking token,” huge bag holders might nonetheless purchase numerous BERA, present it as liquidity to buying and selling protocols and obtain outsize BGT, and the ability they maintain, Smokey stated.
Nonetheless, it is a way more energetic model of “proof of stake” than merely lending one’s tokens to a validator. Below Berachain, the protocols themselves obtain the liquidity of all of the customers looking for financial returns.
The liquidity bootstrapping permits Berachain “to perform extra with much less preliminary assets,” Smokey stated. That might be an vital distinction given the variety of new layer 1 blockchains rolling out and being introduced.
Berachain is positioning itself to attraction to the Ethereum crowd in addition to Cosmos builders, Smokey stated. It is already been in a non-public testnet for a couple of month and has greater than 30 native groups, plus dozens extra protocols from different ecosystems which might be getting ready to roll out variations of their venture on Berachain.