From Theory to Practice: Exploring Proof-of-Liquidity with BurrBear
This article was first published on X/Twitter.
Henlo, and furthermore, Ooga Booga! As a validator committed to Berachain’s core principles, BlockHunters is diving deep into PoL’s practical applications. Our latest initiative involves partnering with bApps on Berachain’s V2 Testnet to test firsthand its impact and effectiveness.
Proof-of-Liquidity
Blockchains rely on validators for transparency and security. Ethereum’s PoS model shows how validators stake assets to earn rewards, with over 32 million ETH staked. PoL shakes things up by enabling protocols to use native emissions for liquidity, rather than renting it.
How does PoL² actually innovate?
The core value proposition of PoL comes from its ability to scale liquidity and security simultaneously, achieving a healthy alignment of incentives between users, dApps, and validators:
- Validators rely on user-delegated BGT to manage its flow, boosting ecosystem activity. They are also motivated to offer real-time rewards to apps to maximize their own earnings.
- Applications drive the $BGT cycle with inventive incentives, collaborating across protocols to better meet user needs.
- Users provide liquidity and delegate BGT emissions. In exchange, they benefit from an optimized BGT flow and see maximized returns.
The Role of BGT
When you participate in Proof of Liquidity, you earn BGT, a governance token that remains permanently tied to your address and isn’t transferable. You can delegate your BGT to network validators, boosting their chances of being picked to propose new blocks. The more BGT a validator receives, the higher their likelihood of earning rewards.
Why delegate your BGT to others? The answer is Berachain’s bribe mechanism. Bribes set up a win-win for both validators and delegators. Validators propose blocks and earn rewards, then share a portion of those rewards with BGT holders who supported them. This setup aligns incentives across the network, ensuring active participation and engagement from all parties.
Validator and App Dynamics
Validators not only chase BGT rewards but can also exchange these for any app’s native tokens, aligning their interests with the apps they secure. As apps succeed, validators earn more, creating positive feedback loops.
Apps and validators that embrace PoL principles become power centers in their own right. They influence the success of the chain and enhance their reputations. Unlike traditional setups where validators collect “rent” passively, Berachain demands active participation and alignment, ensuring that all parties are engaged and working towards shared goals.
Meet BurrBear: Our First Partner on Berachain
We’re kicking things off with BurrBear, an innovative “one-stop stablecoin shop” in the Berachain ecosystem.
Key Features
- Multi Stable Pools: Perfect for assets with stable or known exchange rates. These pools use Stable Math for efficient large swaps and allow LP token nesting for easy routing.
- Burr Pools: 20x more capital efficient for all types of stablecoins — whether they’re backed by currencies, commodities, or other assets, including on-chain synthetics or anything tokenized.
- Generalized Pool: Supports a wide range of token trades with a multi-token constant product model.
BurrBear’s goal is to provide extremely efficient stablecoin swaps. Thanks to the advanced math behind Burr Pools, they operate at 20x the efficiency of standard constant product pools.
This means that a $50k swap in a Burr Pool has the same slippage as a $1M swap in a traditional pool.
Here’s how everyone benefits:
- Users win with less slippage, making swaps cheaper.
- Liquidity pool operators win by deploying less capital, making it more efficient.
- BurrBear wins by attracting high volume, which is crucial for any DeFi application.
Volume is the lifeblood of any DeFi platform. BurrBear’s focus on efficiency will attract more users and liquidity, leading to increased activity. This boost in activity means more BGT from Berachain’s PoL model–and that’s where BlockHunters step in.
Through partnerships with various dApps, we aim to show how PoL can align incentives and benefit all parties involved — users, dApps, and validators. We’re testing PoL’s impact and effectiveness firsthand, utilizing Berachain’s bribing system and engaging with emerging dApps.
Stay tuned for updates and insights from our collaborations with innovative builders in the Berachain ecosystem.
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About BlockHunters
BlockHunters supports leading crypto projects with infrastructure services, including active nodes and key components. We drive technology forward, enhancing security, connectivity, governance, and community support with our competitive and practical expertise.
Where to find us
🔗Website https://blockhunters.org
🔗Linktree https://linktr.ee/blockhunters
🔗Explorer https://scan.bh.rocks/
🔗Twitter https://twitter.com/BlockhuntersOrg
📧Email office[at]blockhunters[dot]org
