Berachain: A new type of dominating dealer chain under a modular incentive model

1. Layer1 Project Background and Technical Architecture

Project Overview 1.1

Berachain originated from the Bong Bears NFT community and was created by a group of developers who started with memes. The core team of the project has rich experience in community operations. In terms of technical architecture, Berachain is built on top of the Cosmos SDK and is EVM-compatible, allowing it to enjoy the scalability of modular design while being compatible with existing dApps and toolchains in the Ethereum ecosystem.

1.2 Polaris Consensus Mechanism

Polaris is the consensus layer solution developed by Berachain, optimized based on a Tendermint BFT variant, emphasizing high throughput and customizability, suitable for multi-chain Rollup scaling. The block time is 1.2 seconds, with TPS exceeding 5000, aiming to serve high-frequency trading and on-chain financial applications.

1.3 Analysis of the Third-Generation Token Mechanism

• BERA: Mainnet gas token, similar to ETH, used to pay transaction fees;
• GOV: Governance token used for participating in DAO proposals and governance decisions;
• HONEY: Incentive token issued by the protocol to LPs and staking participants.

The core of this mechanism lies in the separation of "governance rights" and "incentive rights," avoiding direct interference of "speculative tokens" in the governance process, while guiding long-term liquidity binding and locking behavior.

2 Ecological Structure and Key Project Analysis

As of May 2025, three months after the launch of the Berachain mainnet, there are already over 60 native Dapps deployed, covering DeFi, stablecoins, infrastructure, and Meme projects.

2.1 DeFi sector

BEX (Berachain Exchange)

• Native DEX, using multi-pool AMM architecture, supporting veHONEY governance model.
• Features: Staking voting rights + incentive redistribution mechanism.
• Arbitrage opportunities: Early liquidity is uneven, most trading pairs have slippage arbitrage space, and cross-pool capital migration also creates arbitrage windows.

Honeycomb

• Native lending protocol, supporting lending and staking of assets such as BERA, HONEY, GOV, etc.
• Arbitrage opportunities: There are significant differences in HONEY APR between different lending pools, allowing for annualized volatility arbitrage through the stake-extract-restake path.

Beratra

• Stablecoin protocol, releasing the native stablecoin hUSD based on over-collateralization.
• Arbitrage window: There is a premium/discount difference between the minting cost and the AMM market price, resulting in stablecoin minting and burning arbitrage.

2.2 Infrastructure Sector

• Beranaut Wallet: A lightweight native wallet that integrates veHONEY management and one-click LP staking functionality;
• Skip Router: An aggregated trading router that integrates all mainstream pools and supports Gasless Swap;
• IBC Module: Cross-chain connection with the Cosmos IBC ecosystem, with future plans to integrate Injective, dYdX, and Osmosis.

2.3 Meme/NFT sector

• Bong Bears: The Berachain origin project, the NFT floor price has recently increased by 3 times, and is regarded as the ecological "faith currency";
• HunnyDAO: A re-staking governance experimental project modeled after Olympus, where users can earn multiple rewards by locking up HONEY.
• BEARLotto: On-chain lottery protocol that destroys a portion of HONEY each round, strengthening the deflation narrative.

3 Funding Data and User Behavior Analysis

3.1 Core On-Chain Metrics (as of May 31, 2025)

• Daily transactions on the mainnet: over 960,000 transactions;
• TVL: $628 million, up 240% compared to the first month after launch;
• Stablecoin Market Cap: $182 million (USDC+hUSD)
• Active addresses: 340,000 (7-day average);
• Top 3 projects TVL share: BEX (46%), Honeycomb (29%), Beratra (13%)

3.2 Market Structure Analysis

• Most of the funds come from the migration of liquidity bridges between Solana and Ethereum;
• The veHONEY model has led to a large amount of funds being locked for over 6 months, with TVL liquidity showing "strong on the surface but weak underneath";
• The Binance airdrop incentive release has been completed by 70%, and the short-term selling pressure has basically been digested.

4 Arbitrage Opportunities and Airdrop Strategies

4.1 DEX arbitrage path

• BEX – Honeycomb Arbitrage: Use LP Token as collateral to conduct lending and then adjust positions for arbitrage;
• BEX internal pool arbitrage: low depth trading pairs (such as GOV/USDC) present a controllable slippage arbitrage window, suitable for bot execution;
• Beratra Minting and Burning Arbitrage: Arbitrage in stablecoin mining and extraction during the phase of market price inversion.

4.2 Airdrop Activity Monitoring

• HODLer Airdrop: A snapshot mechanism initiated by Binance, where BERA holders receive random airdrops each month;
• B-Honey Points: BEX offers incentive points, users providing LP and locking veHONEY can exchange for "Honey Points", with an expected airdrop snapshot in June;
• Berachain Quest: Complete on-chain tasks such as cross-chain transactions, staking, participating in governance, etc., to earn badges and reserve empty investment eligibility by binding your wallet address.

5 Market Positioning and Competitive Landscape Outlook

5.1 Analysis of Strong Property Characteristics

• The initial price surged rapidly, with a 280% increase on Binance on the first day.
• TVL rapidly surged, but subsequent data followed the pump, forming a typical path of "American strong main coins": first speculation, then narrative supplementation;
• The project has received early investment from top VCs such as Polychain and Tribe Capital, possessing control and influence.

Comparison of 5.2 with other Layer 1s

Conclusion

Berachain, with its unique three-token structure, modular architecture, and community atmosphere rooted in memes, has established a Layer 1 model that balances strong trading manipulation with innovative mechanisms. As the ecosystem gradually expands and liquidity depth increases, it holds a medium to long-term strategic position in the competition among new public chains.

For investors and researchers, Berachain possesses both the speculative enthusiasm characteristic of Memes and a long-term incentive structure under the ve model, making it a composite asset that balances arbitrage opportunities with ecological sustainability.