Berachain & Monad: What You Need to Know
Proof of Liquidity, Parallelized EVM, & More
It’s no secret that the L1 space is ripe with competition. This has been true from the ICO stage to the 2021 cycle and persists to this day. Chains like EOS and TRON have been around since the beginning, while previous cycle entrants including Avalanche, Fantom, and more saw massive popularity spikes. On the surface, it may seem that the space is, if anything, overcrowded. With the advent of Move chains also throwing their names into the mix and new modular infrastructure springing up to easier enable the creation of new chains, it’s easier than ever to spin up a new L1. Building one that actually attracts users and developers? This is a different story. Incentives have skewed the competitive landscape for better or worse, and liquidity has fragmented making building on a new chain a bit of a burden currently, though a lot of resources are being thrown at this problem.
In today’s edition, we’ll be focusing on Monad and Berachain, perhaps the two chains taking the most interesting approach to building new L1 ecosystems. Most notably, these two chains have both built up massive ecosystems and social media presences, the likes of which probably haven’t been seen for any other pre-launch L1s.
While Berachain embeds unique tokenomics into its blockchain infrastructure, and Monad focuses more on the tech side of things, both chains are alike in their heavy focus on ecosystem growth and social media presence. And of course, while using tech stacks that their respective teams deem the most optimal for their own goals, both chains are EVM compatible. The two chains even play nice together despite the competitive landscape they operate in.
Background on Monad
Monad is a high-performance EVM-compatible layer-1 blockchain aiming to enhance scalability for DeFi and consumer applications. Specifically, it brings parallel execution to the EVM, enabling the chain to be as scalable as the likes of Solana while still leveraging the substantial network effects and developer tooling of the EVM ecosystem. While Solana’s own ecosystem has grown exponentially in the past year or so, the advent of restaking and Ethena has still attracted a lot of eyes and capital to Ethereum mainnet and L2s, despite inferior performance to other chains. The case for maximizing scalability while still maintaining that link to the Ethereum ecosystem is clear.
Monad has four core optimizations, four core optimizations: parallel execution, a parallel database, asynchronous execution, and Monad BFT. Parallel execution alone isn’t sufficient, but combined with a parallel database, asynchronous execution, and a high-performance consensus mechanism (Monad BFT), it significantly enhances performance. These optimizations allow Monad to open the design space for EVM, enabling applications that require high scalability and large concurrent users.
Monad aims for high performance and decentralization, achievable by building an L1 from scratch. The scalability possibilities on rollups simply aren’t as powerful as the approach that Monad takes. The protocol’s four core oprimtizations allow Monad to enhance throughput and lower fees. L2s inherit bottlenecks from Ethereum and have centralized sequencers, while Monad’s custom consensus mechanism can scale to thousands of nodes, ensuring decentralization.
When it comes to ecosystem growth, Monad focuses on supporting talented builders who are driven and have unique ideas that are only possible on Monad. This support includes advice, strategy, marketing, technical assistance, and venture connections. Monad also focuses on good marketing and strong community engagement to attract developers and create a positive association with the brand. Meeting deadlines, shipping products, and maintaining trust are also crucial.
Monad intern has mentioned being very excited about Monad’s community, which he believes is reaching unprecedented levels in the crypto space. He mentions the team’s efforts to create a fun and engaging community experience. Additionally, he looks forward to the upcoming Testnet, which will be the first time people interact with Monad. He talks about the importance of making the Testnet experience special and notes that they will be testing its limits to build a stronger network.
Background on Berachain
Berachain is an EVM-equivalent L1 built on the Cosmos SDK and powered by Proof of Liquidity. Smokey Bear and his co-founder Papa Bear NFTs of bears smoking weed, which led to the creation of Berachain. Berachain is an EVM-identical layer-1 blockchain using the Cosmos SDK, powered by proof of liquidity, allowing users to turn liquidity into security for the network.
Proof of liquidity is described as more of a consensus mechanism variant than a traditional one. It aligns liquidity and security by requiring users to provide liquidity to the ecosystem to earn governance and block rewards on Berachain. The key points include:
Berachain has two main tokens: BERA (the gas token) and BGT (the non-transferable governance and rewards token).
$BGT can only be earned by providing liquidity to the network, not purchased.
Validators need $BGT delegated to them to produce block rewards.
Users earn $BGT by providing liquidity to basic DeFi primitives like a DEX, a perps vault, and a stablecoin lending market.
Validators direct block rewards/emissions towards different pools, creating an incentive structure for protocols and validators to collaborate.
This collaboration allows protocols to bootstrap their own liquidity and directs emissions toward their pools or smart contracts.
Proof of liquidity effectively turns liquidity into security and provides stakeholders with economic incentives and control over the ecosystem, encouraging sustainable growth and usage of the network.
$BGT can be burned one-way into $BERA. $BGT earns fees from network operations and a percentage of incentives from protocols. Users can either keep $BGT for governance and earnings or convert it to $BERA for liquidity, offering them optionality.
Berachain’s design, including proof of liquidity and validator-protocol interactions, is best suited for an L1. He also emphasizes the importance of decentralization and validators’ ability to direct emissions toward the network. Building as an L1 provides flexibility in the stack and allows for a range of economic games. Berachain is working on scaling solutions, including L2s, to handle applications with millions of users. This approach ensures EVM compatibility and adaptability, which would be harder to achieve if Berachain was an L2 itself.
When it comes to ecosystem growth, Berachain focuses on empowering builders through proof of liquidity, reducing friction, and increasing the quality of life for developers. Smokey stresses the importance of not pigeonholing the ecosystem and encourages diverse applications beyond just DeFi. Berachain aims for interconnected applications that can collaborate and form synergies.
Smokey is enthusiastic about shipping the long-awaited Testnet v2 for Berachain, which will showcase proof of liquidity in full effect and improve scalability. He is also excited about the second batch of the Build Bera incubator, which includes high-quality teams and projects branching out into various categories like consumer, DePIN, and RWAs. Smokey looks forward to seeing these teams enter the public spotlight and begin fundraising, anticipating that their innovative projects will generate significant interest.
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