There’s a lot of excitement around Berachain, and it’s easy to see why. It aims to be an ultra-fast, EVM-equivalent blockchain. This means it is completely compatible with all the current Ethereum ERCs and opcodes. That way, developers can just as easily port their applications over. Berachain isn’t just another Ethereum clone, it’s specifically designed to enhance dApps with direct network emissions. The platform addresses the pressing concern of stake centralization and is working toward a more distributed, egalitarian model of governance. Its user-friendly ecosystem makes it easy to connect with tons of other decentralized applications. To discover what’s possible within the ever-evolving Berachain ecosystem, users will want to stop by their user portal.

One of the most interesting aspects of Berachain’s ecosystem is how it’s focused around only three tokens. Knowing what these tokens are will be pretty important for everyone trying to get into yield farming and other things on the network. Here's a breakdown:

  • HONEY: This is Berachain’s native stablecoin, designed to maintain a value of 1 US Dollar. It serves as a stable medium of exchange within the Berachain ecosystem.
  • BGT (Berachain Governance Token): As the name suggests, BGT is used for governance. It also plays a vital role in the validator system of Berachain. Holders of BGT can participate in the decision-making processes that shape the future of the blockchain.

Getting Started with Yield Farming on Berachain

Yield farming on Berachain, particularly with the help of infrastructure protocols such as Infrared, unlocks massive potential returns. You need to do it with your eyes wide open to the process, what’s at stake and what could go wrong. We’ve crafted this step-by-step guide to walk you through everything you’ll need to know to yield farm your way through the world of Berachain.

Preparation is Key

Before diving into yield farming, there are a few things a user needs to have in place:

  1. Wallet Setup: A wallet that supports the Berachain network is essential. MetaMask is a popular choice, but other wallets compatible with EVM-identical chains will also work.
  2. Token Acquisition: Users will need either $BERA (Berachain's native token) or $BGT (Berachain governance token) to stake or provide liquidity. The choice depends on the specific yield farming strategy that they intend to pursue.
  3. Gas Funds: Always keep a small amount of $BERA in the wallet to cover transaction gas fees. Without gas, transactions won't go through, and opportunities could be missed.

Exploring Staking Options on Infrared Protocol

Infrared Protocol provides two native staking methods, designed for different user profiles, enabling users to earn yield on their Berachain assets. Each option presents a unique way to earn returns, appealing to different risk appetites and investment philosophies.

Option 1: Staking $iBGT or $BERA for $iBERA

This option allows users to stake either $iBGT or $BERA tokens to earn $iBERA. To participate:

  1. Navigate to the iBERA page on the Infrared Protocol platform.
  2. Locate the $BERA staking option. This allows users to stake their $BERA tokens to earn $iBERA.
  3. Alternatively, visit the iBGT page and find the $iBGT staking option. This enables users to stake their $iBGT tokens to earn $iBERA.

Option 2: Providing Liquidity Through a Vault

This option consists of being a liquidity provider in a vault, replacing the previous pool model.

  1. Choose a Proof of Liquidity (PoL) vault that supports points. These vaults reward users with points based on their liquidity provision.
  2. Deposit the required tokens into the chosen vault.

Maximizing Returns Through Strategic Vault Selection

To get the most yield farming returns possible on Infrared Protocol, vault selection becomes strategy intensive. High-multiple vaults maximize the possibility of acquiring more points and getting to larger rewards. Some of the high-multiple vaults to prioritize include:

  • WBERA-iBGT Kodiak LP Vault (1.375x points multiplier)
  • WBERA-iBERA Kodiak LP Vault (1.375x points multiplier)
  • WBERA-iBERA BEX LP Vault (1.375x points multiplier)

By prioritizing these high-multiple vaults, users can greatly maximize their point earning potential and yield farming returns.

Earning and Monitoring Points

Points are a very important aspect of the Infrared Protocol environment, they determine what rewards users earn and how much they receive. Learning how to accrue and track these points is critical for maximizing yield farming profits. Points will now naturally scale with pledge duration and vault multiplier. The longer a user stakes or provides liquidity on the protocol, the more points they accumulate. Continuously monitor the above points to both measure success and help determine whether or not you should continue with a yield farming strategy.

Leveraging the Berachain Ecosystem for Enhanced Yield

In addition to the Beyond Infrared Protocol, the Berachain ecosystem is packed with opportunities to supercharge your yield farming strategy. Platforms such as Kodiak and Dolomite offer certain exclusive features and investment incentives that can increase your returns.

Kodiak Islands: Automated Liquidity Management

Kodiak’s automated concentrated liquidity strategy vaults are a true game changer. These vaults enable a “set it and forget it” management of liquidity positions and draw sticky deposits from the regular Joe crypto users. Here's how to leverage Kodiak:

  • Concentrated Liquidity: Utilize concentrated liquidity positions within the base liquidity range on Kodiak DEX. This facilitates automated management of liquidity positions, optimizing capital efficiency.
  • Proof of Liquidity (PoL): Participate in Berachain's PoL mechanism. Liquidity provided by validators directly impacts DEX liquidity pools, enhancing trading efficiency and potentially increasing rewards for liquidity providers.
  • KDK and xKDK Incentives: Earn native tokens, KDK and xKDK, in addition to trading fees from swaps, as a liquidity provider. These tokens can further boost overall returns.
  • Island-specific Strategies: Implement asset-specific strategies, such as those for BGT LSTs (iBGT, yBGT, LBGT, osBGT, stBGT, etc.). These assets have a unique property of having an effective "floor price" at 0.95-1 BERA, potentially mitigating downside risk.

Dolomite: Lending and Borrowing Opportunities

Dolomite will enable lending and borrowing both within the Berachain ecosystem as well as across chains. When users provide their assets to be lent out, they earn interest. By borrowing these assets, firms are able to increase their market exposures or gain access to other investment strategies.

Risks to Consider

Yield farming on Berachain might be super profitable, but it carries risks. Only through education can users know to actively avoid these risks and reduce their chance of exposure to them.

  • Smart contract vulnerabilities: One of the major concerns lies in the vulnerabilities present within smart contracts utilized for yield farming protocols. Even well-audited contracts are not immune to zero-day exploits or unforeseen attack vectors.
  • Impermanent loss: One of the hidden dangers that liquidity providers face is impermanent loss. This occurs when the price of the deposited assets diverges, leading to a decrease in the value of the liquidity pool holdings compared to simply holding the assets.

Whether participating in yield farming or other activities on Berachain, having sustainable long term practices will be key to success. Know the science behind the magic to mine Berachain safely and frugally. Build on the promise within this nascent ecosystem, but remain cautious of the dangers that accompany it. As always, you know that at KnowingCoin.com, we’re all about owning the chain and winning the game, not following the pump and dump.