TLDR: Berachain is an EVM-compatible Layer 1 (L1) chain, currently in test net phase. Built on Cosmos SDK, it focuses on Defi apps. It stands out through its adoption of a so-called Proof-of-Liquidity (PoL) consensus mechanism and separate gas and governance tokens. Berachain recently raised an impressive sum of $100 million in a Series B funding round. There is a large active community hoping for an airdrop.
Lark Davis often quips that Cardano should have called itself Dogdano: it would have seen much more recognition and price appreciation. Well, Berachain seems to have taken notice. What animal is still not taken AND is furry? Well, there you go. Berachain it is.
So, another L1… long live the L1 race and may the best win. The question is: is there even room for yet another layer 1? Berachain is a niche player in a few ways, and what stands out most, technically speaking, is its proof-of-liquidity consensus mechanism. More on that later.
From a usability perspective, what makes Berachain stand out is that it has several in-protocol Defi primitives. Of course, they are bear-themed and start with a B: the decentralized exchange is called BEX, and Bend and Berps are its lending and perpetuals protocol, respectively.
Berachain’s Technology
Custom Polaris EVM is Berachain’s custom-made virtual machine: its core technology which allows it to be compatible with Ethereum, while also integrating with Cosmos for better performance and modularity. View it as a bridge between Ethereum’s ecosystem and Cosmos’ interconnectivity, enhancing the configurability necessary for broad adoption.
(EVM compatibility, to clarify, allows a blockchain to engage with Ethereum’s ecosystem to a certain degree. It supports Ethereum’s smart contracts and tools, though it does not fully replicate the entire EVM environment. But it’s of course a nice feature to have for any chain, to make it compatible with the biggest smart contract platform out there.)
Proof-of-Liquidity (PoL) Explained
As mentioned, Berachain uses Proof-of-Liquidity as a consensus mechanism. Unlike traditional Proof-of-Stake systems where validators lock up native tokens to secure the network, Berachain’s model requires them to contribute to the liquidity pools of the network. For example, as LP’s for Defi protocols and pools. Here’s an image by Mangata Finance.
To clarify what’s the difference between proof-of-stake (PoS) and proof-of-liquidity (PoL), imagine a community garden.
A Proof of Stake ‘Community Garden’
First, imagine a proof-of-stake community garden where the right to decide what to plant and harvest in each section of the garden is determined by how much each member has invested in gardening tools. The more tools you contribute (stake), the more fruits and veggies you may harvest. Compare this to Proof of Stake, where participants secure network operations by locking up (staking) a certain amount of their coins. The more they stake, the higher their chances of being chosen to validate transactions and earn rewards. PoS ensures that those who have a significant investment in the network are in charge of maintaining its security and operations.
A Proof of Liquidity Community Garden
Now, consider a twist on the community garden model. In this version, the right to make decisions isn’t…
Erik started as a freelance writer around the time Satoshi was brewing on the whitepaper.
As a crypto investor, he is class of 2020. More of a holder than a trader, but never shy to experiment with new protocols.
