Infrared Finance - Berachain LST: What You Need to Know
Strategic Funding Round ft. Binance Labs, $iBGT & siBGT Tokens, & More
As the markets have been in a downturn lately, the effect of new bridging and L1 infrastructure tokens launching has been more apparent, with new token launches and unlocks diluting the prices of alts. It’s become clear to many that the infrastructure trade window is closing, for now. Despite this, there is still a couple of extremely highly-anticipated L1 launches upcoming, in Monad, as well as 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 debuted a collection of NFTs portraying bears smoking weed, which led to the introduction of Berachain. 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.
During the bear market and toward the end of last year we saw staking and LSTs become a staple in most major ecosystems in and out of the EVM, from Ethereum mainnet and L2s, to the Cosmos ecosystem app chains, Move chains, Solana, and more. The industry has swelled to over $34B in total TVL. In today's edition, we’ll be discussing Infrared. As Berachain is currently in its testnet V2 phase, Infrared has emerged as perhaps the largest LST provider on the chain, fresh off of a recent raise announcement.
Stay informed, stay alert ⬇
Background on Infrared
Earlier this month, Infrared raised an undisclosed amount in a strategic funding round, specifically from Binance Labs. These institutional investments add some legitimacy to the chain, whose whimsical branding can put the protocol in a less serious light compared to other top L1s both existing or upcoming. This is especially true considering that Berachain has yet to launch; despite this ecosystem teams have been able to get lots of attention, and funding evidently.
The most recent Infrared Raise comes after raising $2.5M in a seed round earlier this year, from the likes of NGC Ventures, Tribe Capital, Shima Capital, and Signum Capital, among others. Infrared was incubated by the Build-a-Bera initiative, a 12-week incubator that takes on 5 projects at a time. The second batch of the Build-a-Bera incubator includes high-quality teams and projects branching out into various categories like consumer, DePIN, and RWAs.
To understand what Infrared does, it’s important to have a basic understanding of Berachain itself, as the chains inherent Proof-of-Liquidity framework shakes things up. 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. 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.
Infrared provides a liquid staking solution for BGT via iBGT. Compared to other PoS chains, iBGT in particular is valuable as it simplifies some of the complexities of the Berachain PoL (Proof of Liquidity) system. Users can deposit PoL assets into the Infrared protocol to acquire iBGT. iBGT requires holders to use the tokens within Berachain DeFi, as it doesn’t natively accrue yield like BGT does. iBGT can also be staked for siBGT, which then allows users to receive the native BGT yield from block rewards and bribes, a boosted yield.
Infrared is slated to go live on Berachain’s v2 Bartio Testnet soon. Infrared’s governance token will be dubbed IRED, used to reward some protocol pools as an additional incentive, as well as governance and revenue share. IRED holders may receive bribes from other protcols who wish to direct emissions toward specific pools. Infrared is slated to go live on Berachain’s v2 Bartio Testnet soon.
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