This edition of the newsletter dives into the Infrared Finance - the backbone of Berachain. We'll also share some interesting articles, portfolio updates and market highlights.
Special thanks to YY, Melvin, Adna, Nikos, Keith and Ash for their help.
Please do enjoy reading,
Ash
1. Research Articles
a) Consumer on Bera: An ecosystem spotlight on Berachain native consumer-focused apps
• Consumer crypto is often associated with web3 social experiences where blockchain technology can actually benefit the majority of users.
• Berachain has been developing a large ecosystem of consumer focused projects: PuffPaw, Beratone, OverUnder, and Goy.
This week I wrote about how Berachain's consumer brypto ecosystem stands out, with a spotlight on some of the most innovative apps in this category.
Enjoy, and as always, please feel free to DM me your thoughts! Ooga booga.
blog.berachain.com/blog/consumer-…
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b) DeFi Yields
• Fixed-rate lending protocol Pendle stands at the top as the overall category leader with a tremendous 1st half to 2024, growing TVL by 10x from $300M to $3.5B in 6 months.
• They also lead the "Yield" category on DeFiLlama (https://defillama.com/protocols/Yield) with $3.5B in TVL.
c) Bitcoin2024: Behind the orange veil
• In Trump's speech: "The U.S. will not sell its bitcoin. It will establish a strategic reserve. There will never be a CBDC while I am President of the United States".
• Bitcoin’s journey moves beyond us now, from fringe believers to the center of the geopolitical stage.
d) EigenLayer AVS ecosystem
• As a refresher, EigenLayer utilizes Ethereum's established economic trust as a foundation for building infrastructure components called Actively Validated Services (AVS) - this redefines bootstrapping for PoS networks.
• This simplifies development, accelerates innovation and reduces entry barriers for new projects, similar to how cloud services transformed app development.
e) Technical Comparison: FHE vs ZK vs MPC
• ZK emphasises “Prove Without Revealing” ; MPC emphasises “Compute Without Revealing” and FHE emphasises “Encrypt to Outsource".
• ZK offer powerful theoretical guarantees but are complex to implement in practice (mathematical requirements). Both MPC and FHE face significant challenges in efficiency, hindering their practical adoption despite theoretical promise.
2. Portfolio Highlights
a) Particle Network
• Particle Network raises a round from Binance Labs to address user and liquidity fragmentation in crypto.
• This is further validation of a “One account, one balance, on any chain” future for the crypto ecosystem.
b) BlonkFi
• Collateralise your memes on Solana for liquidity.
• BlonkFi raised a pre-seed fundraising round led by UOB Venture Management and Signum Capital with participation from Manifold Trading and Kyros Ventures.
BlonkFi is excited to announce it has successfully closed its pre-Seed fundraising, led by UOB Venture Management and @Signum_Capital .
Investors in this round include @ManifoldTrading , @KyrosVentures , @hypotenuse_labs and other strategic partners.
BlonkFi is a…
c) Pichi Finance
• Pichi Finance simplifies farming across multiple protocols. Users can now earn points directly within the wallet, which can then be seamlessly traded on Pichi's trustless marketplace.
• They also conducted their public sale through an LBP on DaoMaker before their token goes live in August + marketplace to trustlessly trade points is also live.
d) Sipher (Aether Labs)
• Sipher's play to airdrop and questing campaign is in its final phase where season 1 officially ends on 11 August 2024.
PLAY TO AIRDROP SEASON 1: FINAL PHASE Siphers, Arise. The time has come to claim your final quests!
Claim Now: play2airdrop.atherlabs.com
Continuous Quests
- Genesis Collector (Earn points for each Genesis NFT collected)
- Early Bird (Convert Nanochips to points)
- Big…
e) Moxie (by Airstack)
• Moxie is developed by the Airstack team and represents a Farcaster community-owned and community-governed protocol.
• They launched their $MOXIE airdrop for Farcaster users (joined before 10 July 2024) and can be claimed here: https://warpcast.com/betashop.eth/0x97906c21
f) Amulet
• Amulet introduces FortLayer, an application-centric restaking layer built on Solana.
• By combining restaking with a risk-pooling model, the system aims to enhance security. This approach not only safeguards against traditional crypto-economic risks but also extends protection to cover cyber, operational, and financial threats.
It has gained substantial traction on @Ethereum with a total restaked TVL of over $17.8B, representing over 16%…
3. Infrared Finance
Introduction
Infrared is building a protocol to give users on Berachain access to proof of liquidity (PoL) in one click. The protocol aims to maximise value capture by providing easy-to-use liquid staking solutions for $BGT and $BERA (which can be used across the Berachain ecosystem), node infrastructure, and PoL vaults.
Before diving deeper into the mechanics, we will give a primer on Berachain as a refresher for readers and then go in-depth on Infrared's innovative solutions.
Berachain Primer
Berachain is an EVM compatible L1 powered by a novel proof-of-liquidity (POL) concept, rewarding users who provide liquidity to the chain's native dApps. Their goal is to fix unsustainable and unaligned incentives, fractured and mercenary liquidity, and poor bridging infrastructure.
Berachain operates under a tri-token model:
• $BERA: native gas token for transactions.
• $HONEY: native stablecoin representing a medium to transact in.
• $BGT: primary reward and governance (soulbound) token. Obtain this only by providing liquidity to whitelisted dApps. $BGT is also used to delegate to validators and actively participate in on-chain governance.
* Important to note only Bera and Honey are tradable, while $BGT is non-liquid and non-transferable.
Proof of Liquidity (PoL)
PoL is a way of rewarding users who provide liquidity to certain dApps, or undertake any other actions like borrowing/lending or transacting in vaults. By contributing to the network, this earns users more $BGT tokens which can be used to vote on how the network is run. This system rewards people for helping the network and gives everyone a say in its future, not just those who are wealthy.
Users who own $BGT delegate their tokens to validators to help secure the network. Berachain v2 launched with new updates:
• Validators need to stake 69,420 $BERA (staked to start producing blocks) to ensure a higher economic stake and reduce the cost of potential attacks.
• Block production is more fair, where all validators have an equal chance to produce blocks (rewards increase in proportion to delegated $BGT, while $BERA gives a base rate per block).
You can visualise the flywheel: users increase network liquidity and show proof of liquidity actions --> actions gain more governance power --> delegate this power to validators --> validators secure network + earn rewards --> rewards flow back to delegators.
In short, PoL harmonises the relationship between validators, protocols and users:
• Validators: use $BGT to help protocols get more users while securing the network.
• Protocols: pay validators (bribes) to get better rewards while getting liquidity to scale.
• Users: earn rewards and get a say in governance through $BGT.
Protocols get more users while validators get more rewards all while making the Berachain network more secure.
Problems
Participating in Berachain's POL activities can be too complex for the average DeFi participant who wants to use different DeFi or Gaming dApps but does not necessarily want to go through the hassle of providing liquidity nor be a power user.
$BGT is not necessarily composable with different DeFi dApps on the chain as well since provision of liquidity involves having to stake/lock up the tokens into those platforms.
Enter Infrared Finance, a protoco to maximise value capture by providing easy-to-use liquid staking solutions for $BGT and $BERA which we will cover more in-depth below.
Product overview
Infrared Finance introduces LSTs for both $BGT ($iBGT) and $BERA ($iBERA) that will be easy to navigate for users. These LST solutions ensure liquid, composable, and yield-bearing tokens that can be used across the DeFi landscape on Berachain while also simplifying the complexities of PoL.
Liquid Staking Tokens
a) $iBGT
$iBGT is Infrared's flagship LST for $BGT, and each $iBGT is backed 1:1 by $BGT (redeeming 1 $iBGT gets you back the corresponding amount in $BGT , similar to how Lido's $stETH works with $ETH). Infrared operates as a validator on the Berachain network and abstracts away participation in the PoL mechanism for users.
Do note that users who hold $iBGT = forgo $BGT’s native yield in favor of using iBGT across the Berachain ecosystem. However, Infrared provides an option for users to stake their $iBGT which captures all native BGT yields (bribes and fees from Berachain native dApps). All staked $iBGT will earn yield from more than one underlying $BGT token, and this creates an insane yield multiplier.
b) $iBERA
A LST solution for $BERA the gas token, of which $iBERA is backed 1:1 by $BERA. Every $BERA that is deposited into Infrared is staked with their validators, to enhance the network's economic security and decentralisation. Similarly to $iBGT, $iBERA can be used throughout the DeFi ecosystem on Berachain to earn yield from lending, borrowing, providing liquidity, etc. while earning staking yield from Infrared’s validators.
$IRED - Infrared's native token
$IRED is the governance token for the Infrared platform and token holders can influence how rewards are distributed among liquidity providers. Will let the team release more details on this in the future!
Ooga Booga - Infrared now represents a platform for easy one-click liquid staking and yield optimization on Berachain which is further influenced by the $IRED token, benefiting all parties in its flywheel: users, protocols and validators.
How to get started
Infrared is now live on Berachain's v2 testnet, where users and developers can now experiment with $iBGT and Infrared’s smart contracts to try things out before mainnet.
Steps:
• Deposit liquidity into Infrared vaults
• Users get $iBGT in return from the smart contract
• $iBGT can then be used with other dApps (whitelisted partner protocols) or staked to earn testnet rewards associated with $BGT.
For users: https://docs.infrared.finance/general/prerequisite
For developers: https://docs.infrared.finance/developers/architecture
Concluding thoughts
Signum Capital has invested in Infrared as we believe they will be a core player in the Berachain ecosystem. The founding team has a stellar track record, having built DeFi products at Redacted Cartel.
Coming from the Build-a-Bera Accelerator and establishing key partnerships with the Berachain Foundation + other native protocols, we believe Infrared is strategically aligned with all key players in order to make their protocol successful.
As more information gradually unravels over the weeks to come in the lead up to Berachain's mainnet launch, we are confident that Infrared Finance will redefine how liquidity is seen in a DeFi ecosystem and we are excited to partner with them in their vision.
Relevant Links
• Website: https://infrared.finance/
• Twitter: https://twitter.com/InfraredFinance
• Medium: https://medium.com/@infraredfinance
• Docs: https://docs.infrared.finance/
