Berachain Protocol Frequently Asked Questions
How well does Berachain perform?
Berachain has the following properties:
- Block time:
5s
- Finality:
Instant finality
What is a DEX?
DEX stands for Decentralized EXchange. It is a place where you can buy and sell tokens that lives directly on the chain instead of being run by any one centralized service. This means that all liquidity can be seen directly on-chain, and is verifiably owned by the smart contracts themselves. A DEX enables you to swap tokens directly from your wallet, as well as allowing anyone to launch their own tokens and provide liquidity.
What is a swap?
A swap is the process of exchanging one token for another. This can be thought of as a buy or a sell, depending on which token you're looking at. For example, if you're looking to buy BERA with ETH, you would be swapping ETH for BERA. This is essentially "selling" ETH and "buying" BERA.
How much does it cost to swap?
Each swap has a fee which varies dependening on the fee that was set when the pool was created. Common fees are 0.05%, 0.1%, 0.3% or 1% but you should always check when performing a swap to ensure you are okay with the fee on that pool.
What is liquidity?
Liquidity is the term for the amount of a token that is available to be swapped. The more liquidity a token has, the easier it is to swap that token.
What is a liquidity pool?
Liquidity pools are pairings of 2-8 tokens that liquidity providers deposit tokens into. This enables DEX users to swap between any of the tokens in the pool.
What is a liquidity provider?
Liquidity providers are users who deposit tokens into a liquidity pool. They are rewarded with a portion of the fees that are generated from swaps in the pool.
What is PRR?
PRR stands for Projected Rewards Rate. This is an estimation of the rewards received when depositing in a pool.
What determines the PRR for each pool?
Rewards are determined by two things:
The amount of fees generated by the pool
This is determined by the total amount of swaps that happen in the pool and the fee that is set for the pool. The more swaps that happen, the more fees are generated. The higher the swap fee, the higher amount of fees generated per swap. However, swap fees should be set to a reasonable amount to ensure that users are not deterred from swapping in the pool.
The amount of BGT emissions going to this pool
This is determined via votes made by the Berachain validators every epoch. Each validator can select which pools they would like to receive BGT rewards and how much of the total BGT emissions should go to each pool. The validator's BGT rewards are determined based on the amount of BGT delegated to them out of all BGT delegated in the system. The more BGT emissions that go to a pool, the higher the PRR for that pool.
What is HONEY?
HONEY is the native stablecoin of the Berachain ecosystem. It is a stablecoin that aims to be equal to 1 USDC, and is used throughout the Berachain ecosystem. Learn more about Honey in Honey Stablecoin page.
Does it cost anything to mint or burn HONEY?
In order to ensure stability, there is a small fee taken on every mint and burn of HONEY. This fee is currently set to 0.5% of the amount minted or burned and can be changed via governance proposals.
Additionally, because minting & burning requires a transaction, there will be a small gas fee in BERA.
What stablecoins can I mint HONEY with?
There are various USD-pegged stablecoins that can be used to mint HONEY. Currently, the following stablecoins are supported:
- USDC
What is BGT?
BGT is Berachain's staking & governance token. That means it is used to secure the network & earn rewards via Proof of Liquidity as well as to vote on governance proposals. Learn more about BGT in BGT Token.
What is a Validator?
A validator can refer to three things:
- A blockchain node being run to validate transactions, produce blocks and come to consensus with other validators in the network
- The entity that owns and operates the validator node
- The blend of points #1 and #2 that manages a portion of Proof of Liquidity & Governance votes
In the case of BGT station, we're referring to the #3, as BGT station is here to help you decide which validators you'd like to delegate to.
Why should I delegate my BGT?
Delegating BGT allows you to participate in Proof of Liquidity while helping secure the network.
Why should I delegate my BGT instead of burning it for BERA?
Rewards are the main reason.
With Proof of Liquidity, you can earn many different types of rewards. More rewards than you can earn on basically any other chain:
- BGT Inflation
- Block Captured Value
- DEX Fees
- Honey Fees
- Perps Fees
- Gas Fees
Learn more about all of these rewards in Protocol Rewards.
How do I get BGT?
BGT is earned by depositing liquidity into trading pairs on the DEX that are earning BGT emissions.
What is governance?
Governance is the process by which the community decides what changes are made to the Berachain protocol. This includes how the node is upgraded and what parameters are set for various components on the chain.