iBGT: The Future of Liquid Staking on Berachain
Berachain is an EVM-compatible Layer 1 blockchain that features a unique Proof-of-Liquidity (PoL) sybil resistance mechanism. Designed to boost capital efficiency and liquidity, PoL aligns the interests of infrastructure providers with application developers, driving value to the ecosystem at large.
A key component of Berachain’s PoL design is the Berachain Governance Token (BGT) — a non-transferrable and illiquid governance token. Users earn BGT by engaging with Berachain’s native dapps (e.g. the BEX), enabling them to delegate to validators and actively participate in on-chain governance. Once delegated, BGT becomes a yield-bearing asset as users begin to earn various rewards from the network such as block rewards and “bribes.”
PoL’s design is truly innovative, and will set Berachain apart from other Layer 1 networks, but given its novelty, we are committed to ensuring users have the best possible experience when interacting with the system.
Acknowledging the demand for simplicity and composability in DeFi, we’ve introduced iBGT, the Infrared Berachain Governance Token. iBGT further enhances BGT’s utility by providing a liquid wrapper that simplifies a few complexities of PoL, detailed below.
iBGT Overview
The liquid staking vertical, a $58 billion industry, thrives for one reason: users seek assets that are liquid, composable, and yield-bearing. The Berachain ecosystem is no different.
iBGT is our flagship liquid staking solution for BGT, where each iBGT is backed 1:1 by BGT. Behind the scenes, Infrared operates as a validator on the Berachain network and abstracts away participation in the PoL mechanism for users.
The iBGT flywheel.
By depositing PoL assets with Infrared, users can take part in various pools to maximize their BGT yields, receiving iBGT in return. Earning iBGT, instead of BGT, enables users to pursue additional opportunities on Berachain or earn boosted BGT staking yield via staking.
To Stake or Not to Stake
Many liquid staking solutions (on Ethereum and other chains) rely on a single token design. Such designs typically involve the use of a rebasing model, which requires the token to be wrapped before it can be used throughout DeFi, resulting in a clunky experience for users and partners.
With iBGT, we’ve embraced a design that gives users a choice consisting of iBGT and staked iBGT, which we believe will improve the user experience, enhance token utility, and make iBGT’s yield more scalable.
iBGT
As highlighted earlier, users earn iBGT by depositing assets into Infrared vaults. iBGT, a liquid version of BGT, does not earn yield natively. Instead, holding iBGT means forgoing BGT’s native yield in favor of using iBGT across the Berachain ecosystem.
iBGT can, and will, be used on DEXes, lending markets, and a host of other use cases available on Berachain. This type of composability would not be possible without Infrared and gives users a novel type of exposure to BGT.
Staked iBGT
Staked iBGT is the staked version of iBGT, which captures all native BGT yields such as block rewards and bribes. But, there’s a twist. Behind the scenes, Infrared allocates all earned BGT to our validators, guaranteeing rewards on every BGT earned by the assets in our vaults. As a result, since only staked iBGT qualifies for these rewards and not all iBGT will be staked, users who stake iBGT enjoy boosted BGT yields.
To simplify: staked iBGT will earn yield from more than one underlying BGT token — creating a yield multiplier.
Why Two Tokens?
By dividing liquidity and staking into iBGT and siBGT, we enhance both the user experience and yield for different user groups. Some of our users will want to pursue opportunities throughout DeFi and some will want to stake and collect BGT rewards. This separation maximizes yields on both sides of the risk curve while maintaining a seamless user experience for users and partners alike.
What’s Next?
iBGT opens new doors for the Berachain ecosystem by building on PoL and BGT’s existing design. Through iBGT, BGT can be integrated into any and all DeFi protocols on Berachain, enabling products that simply weren’t possible before.
As the ecosystem grows, Infrared’s unique position as a primary aggregator for staking and governance power through iBGT is poised to become a cornerstone of the Berachain landscape.