Berachain will launch with an initial set of "House pools". These pools aim to have deep liquidity in order to be the ideal pools used for creating MetaPools on the native DEX.
What is a MetaPool?
A MetaPool is a liquidity pool comprised of at least 1 LP token (a token representing shares of another liquidity pool). This enables greater capital efficiency in the entire system as instead of spreading the same tokens across multiple different liquidity pools, the same tokens can essentially provide liquidity in multiple pools simultaneously.
Below we'll compare traditional pools and metapools using the following example:
There is $100 of $HONEY on Berachain. This $HONEY needs to be paired against both $BERA and $stgUSDC, separately. What is the best method of creating these liquidity pools?
Without MetaPools, we would likely create the following liquidity pools:
- $50 of $HONEY paired with $50 of $BERA
- $50 of $HONEY paired with $50 of $stgUSDC
With MetaPools, we can now improve the liquidity depth of the pools with the same tokens as follows:
- $100 of $HONEY paired with $100 of $stgUSDC
- $100 of $HONEY/$stgUSDC LP tokens paired with $100 of $BERA
While you could ask "why not just create a pool with all 3 assets at equal ratios", there is an important difference here. Not all stablecoin liquidity providers may want to be exposed to the volatile price of $BERA, and thankfully that's possible because only 50% of the LP token providers actually need to provide their tokens to the 2nd liquidity pool in order to provide the above pool.
Berachain's House Pools
In addition to the capital efficiency mentioned above, the house pools are the default pools earning BGT emissions when validators do not customize their emissions, therefore it's reasonable to assume that the house pools will receive a fair amount of liquidity making them ideal for MetaPools.
The exact quantity and composition of House Pools is currently under research and will be updated here once finalized.