Berachain

POL auto-compounding vaults

Berachain went live with a completely new paradigm on their chain which helps keep the liquidity on the chain by involving LP tokens in the consensus mechanism.

How it works?

Proof-of-Liquidity (PoL) is an extension of Proof-of-Stake (PoS) that realigns economic incentives among validators, applications, and users. This is enabled through a two-token model - a token responsible for chain security ($BERA) and a token responsible for governance and rewards ($BGT)

The main components in POL are:

1. Validators: Anyone who wants to be validator have to stake $Bera and run the software on a VM which should be connected to the wider network. Validators are responsible for:

   1. Producing blocks and verifying transactions

   2. Redirecting BGT emissions to reward vaults

   3. Participating in governance

2. Reward Vaults: These are vaults that validators decide through governance to redirect BGT emissions to. The reward vaults incentivizes a certain action like staking of LP tokens.

3. BGT Farmers: Anyone can become a farmer by selecting a reward vault and getting themselves whitelisted as required by reward vault to recieve BGT emissions. These emission can be redirected to validators so that they can generate more BGT emissions.

4. Protocols: Protocols on Berachain incentivizes the action they want user to perform by given out rewards to validators so that they emit BGT onto the reward vault participants. BGT farmers are also incentivized by Validators from the rewards they receive from protocols. It is done so that BGT holders can delegate their BGT emissions back to the validators.

Berachain employs a unique three-token system:

• BERA: The native gas token used for transaction fees and staking by validators.

  • The more $Bera a validator stake the more chances they get to propose a block.

• BGT (Berachain Governance Token): A non-transferable token earned through liquidity provision, used for governance and staking.

  • The BGT emissions are directly proportional to BGT emissions redirected to validators.

• HONEY: A stablecoin used within the ecosystem for trading and as a medium of exchange.

User Feedback

As explained in the previous document of how berachain works, users face following problems:

1. Complexity to understand the POL infrastructure.

2. Constantly moving funds to different reward vaults for maximising returns

3. Manually claiming and restaking BGT to validators

How Raga Finance solves it?

Raga Finance have created vaults that enables users to earn maximum return without any such complexity. Raga Finance keep in mind following things for their vaults

1. Risk involved in vaults

2. Auto compounding of rewards

3. Educate users about what they are investing in

4. Easy withdrawals

5. Onboarding and OffBoarding of users in their desired assets.