Berachain is an innovative EVM-compatible Layer 1 blockchain built on the Cosmos SDK, featuring a distinctive consensus mechanism called Proof-of-Liquidity, Polaris EVM as their EVM framework, and CometBFT as their consensus engine. Berachain handles block building and block storage on Cosmos, while transactions and EVM runtime is handled using the Polaris EVM.

Polaris EVM & Precompiles

Polaris EVM is a modular framework designed by the Berachain team to integrate the Ethereum Virtual Machine into any underlying consensus engine or application, such as the Cosmos-SDK. Berachain with Polaris not only supports EVM smart contracts and applications, but also ensures full interoperability within the broader Cosmos ecosystem.

One aspect of Polaris that has not garnered too much attention is Polaris’ extensive set of precompiles.

But hold up. What are precompiles? Precompiles are essentially smart contracts built into the blockchain client itself, referenced by an address, but not running on the EVM like typical smart contracts. This allows for commonly-used and computationally intensive functionality, such as cryptographic functions, to be executed more efficiently as precompiles.

And Berachain has a lot of them. This allows for a tight integration with the Cosmos SDK, and for performant operations of frequently used functionality, such as the dex module.

This allows for a very expressive environment where developers can access Cosmos-specific functions from within their dapps.

Polaris is not the only EVM implementation in the world of Cosmos. Ethermint, which is another EVM framework, has been around for years. The Berachain team chose to build their own framework from the ground up however as they wanted a more modular and composable framework to build on. Polaris also appears to be well more performant than Ethermint:

Ethermint is used by chains such as Injective, Evmos, Canto and soon, Aether.

This setup is used in Berachain to tap into more complex features on the chain, especially those involving different Cosmos modules, which can't be accessed through the EVM, such as the staking module; native dex module, and the governance module. Here we can see the difference in the set of Evmos (Ethermint) pre-compiles and the Berachain Polaris pre-compiles:

CometBFT

CometBFT is a consensus engine and blockchain application platform forked from Tendermint Core. It’s being developed by several entities including Informal Systems, Binary Builders, and StrangeLove.

It is made of two separate components: a consensus engine based on the Tendermint consensus algorithm and an application blockchain interface (ABCI). The ABCI allows applications written in any programming language to benefit from BFT replication.

Proof of Liquidity

Proof-of-Liquidity is designed to ensure that Berachain is a liquidity powerhouse that rewards both individual liquidity providers (delegators) and protocols that contribute to the network’s security.

In Berachain's PoL system, both validators and delegators play pivotal roles. Delegators can earn BGT by providing liquidity to built-in DeFi primitives, including the native DEX, perpetual exchange, and a stablecoin lending platform or by delegating their BGT to validators, who are responsible for block building. Validators earn rewards in the form of gas fees, BGT inflation, and BCV (more on this later) as rewards. A portion of the BGT inflation rewards are directed back to delegators through the built-in DeFi primitives. Validators are able to choose which whitelisted pools receive BGT emissions, incentivizing delegators to deposit tokens into pools with higher emissions.

In addition to reward distribution through PoL, an optional incentive mechanism in the form of bribes exists.

Bribes

Bribe mechanics in Berachain allow validators to attract users by offering additional rewards to their BGT delegators, while also incentivizing protocols to participate in validating by launching their own validators or partnering with existing validators. These bribes are predetermined by protocols prior to the start of epoch.

Protocols can work directly with validators to incentivize liquidity for their token through these bribes. As a result, validators direct a portion of BGT rewards towards the protocol’s token, while keeping a portion of the bribes.

Validators

Validators are crucial in maintaining network security and consensus under PoL, and have the responsibility of proposing new blocks and attesting to their validity. Validators are randomly selected to propose blocks or attest. The random selection is weighted based on the amount of BGT a validator has.

Validators earn rewards in the form of gas fees, BGT emissions and BCV (block captured value). New BGT is created and distributed every block based on the predetermined inflation rate of the chain. Validators keep a certain percentage as commission, while the remaining BGT is sent to delegators through liquidity pools and other built-in DeFi primitives, based on the amount of new inflation is voted towards them by validators. Block captured value refers to fees that come from built-in DeFi primitives, such as the native DEX, BEX, perpetual exchange, BERPS, and the stablecoin lending platform, Honey.