Signum Newsletter 34
Weekly alpha for your weekend reads
This edition of the newsletter dives into Berachain - a unique Proof-of-Liquidity (PoL) consensus mechanism chain with a dual-token model ($BERA and $BGT), built on BeaconKit for high performance and EVM compatibility. While initially marketed as a "consumer crypto ecosystem," Berachain is currently focused on establishing DeFi protocols as financial infrastructure, with plans to expand into consumer-facing applications once the ecosystem matures. We'll also share some interesting articles, portfolio updates and market highlights.
1. Research Articles
a) How “Venture Capital 3.0” Impacts Founders in the AI Age
• According to NFX, the venture capital industry has entered its third era ("VC 3.0") marked by ubiquity and AI integration, with over 32,000 active VCs compared to just 150 in 1994, making it an unprecedented time for founders to raise capital.
• Despite increased competition and potential challenges like PE-style investing and AI-driven changes in how VCs operate, the article argues that the number of VCs will continue to grow due to factors like international expansion, new types of LPs, and the application of the VC model to industries beyond software.
How "Venture Capital 3.0" Impacts Founders in the AI Age
Explore the changing landscape of venture capital, from its growth to 32,000+ VCs, the impact of AI, and what it means for founders in 2024. Key insights on fundraising, valuations, and industry trends.
b) DEXs
• The report covers five major DEXes in early 2025, with Raydium leading at $166.6B in January volume, while Uniswap V3 saw significant growth on Layer 2 chains (particularly Base with 75% of new traders).
• Other notable developments include PancakeSwap's $50B monthly volume with decreasing CAKE token supply, Aerodrome's dominance on Base with $152B in volume, and Meteora's rising revenue on Solana, all indicating strong growth in decentralized trading platforms.
ON-311: DEXs 🔀
Coverage on Uniswap, Raydium, PancakeSwap, Aerodrome & Meteora
c) Why Is Everyone in Ethereum Talking About TEEs?
• TEEs are important for MEV solutions (e.g. make block building more decentralized and transparent, moving away from exclusive orderflow deals). Integrated into L2s through Rollup-Boost, a sidecar system that enables faster confirmations and more innovation while maintaining compatibility with existing frameworks
• Some L2s are incorporating TEEs into their bridge proof systems as a complement to ZK proofs, creating multi-proof systems that provide additional security layers
https://paragraph.xyz/@chaskin/why-is-everyone-in-ethereum-talking-about-tees
2. Portfolio Highlights
a) Infrared Finance
• Infrared is a platform that simplifies participation in Berachain's Proof of Liquidity (PoL) system by offering liquid staking for BGT and BERA tokens through their liquid versions iBGT and iBERA.
• Users can earn iBGT by staking liquidity in PoL vaults and can stake BERA to receive iBERA, which earns staking rewards while remaining usable for trading and other DeFi activities.
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b) MyShell
• MyShell's AI agent collaboration with Wise Monkey, a meme brand inspired by the Three Wise Monkeys proverb, achieved remarkable success by enabling community members to generate AI-powered monkey-themed art, resulting in 100K+ views, 49K+ X followers, and a 400% surge in community engagement.
• The partnership demonstrates the potential of AI agents in transforming passive content consumers into active creators, while validating MyShell's product-market fit with over 50K fans and 10K call requests, positioning them as pioneers in the AI agent industry.
3. Berachain Ecosystem Overview
It’s finally time for Berachain’s mainnet launch. While it’s hard to say that “it’s 100% different this time”, Berachain does bring some unique characteristics that set it apart from other chains due to their innovation at the chain layer. Berachain introduces a more refreshing tech stack in that of a high-performance EVM-identical Layer 1 blockchain built on BeaconKit, its modular consensus framework. BeaconKit integrates the benefits of CometBFT—such as increased composability and single-slot finality (SSF)—with full EVM compatibility. The main advantage of this design is that it leverages CometBFT’s technology while seamlessly integrating with the EVM developer community, minimizing friction and ensuring developers don’t face inertia when adapting to a new development environment.
Berachain employs a unique consensus mechanism called Proof-of-Liquidity (PoL), which not only secures the network but also functions as a supply sink within Berachain’s tokenomics. Unlike traditional Proof-of-Stake (PoS) systems that primarily reward validators, PoL prioritizes users, decentralised applications (dApps), and validators in a more economically aligned structure. Instead of validators receiving the bulk of rewards, PoL directs most emissions into application reward vaults, allowing dApps to actively incentivize user participation and liquidity provision. This is achieved by featuring a dual-token model in that of $BERA and $BGT. $BERA serves as the gas and staking token, used for transaction fees and validator activation. $BGT is a non-transferable governance and incentive token, earned by staking PoL-eligible assets in reward vaults. $BGT can be swapped one-way for $BERA and delegated to validators to earn rewards. This reduces governance centralisation, and creates a healthier incentive model for long-term ecosystem stability.
Berachain is also focused on developing a consumer-centric ecosystem by onboarding user-friendly dApps and curating a better overall user experience (UX). Many of these consumer dApps follow an 'x-to-earn' model, where users earn tokens by engaging in everyday activities such as running, sleeping, or browsing the web.
Additionally, Berachain’s Bear-themed branding effectively increases mindshare and gives the chain a distinct niche in the crowded blockchain space. By integrating this branding across core contributors, community members, and dApp design, Berachain has created a recognisable identity that strengthens its presence and reinforces long-term ecosystem growth.
DeFi - the building blocks of every budding ecosystem
Decentralised Finance (DeFi) serves as the backbone of every emerging blockchain ecosystem, providing the essential financial infrastructure needed for sustained growth. At the core of DeFi are Decentralized Exchanges (DEXs), which play a crucial role by facilitating liquidity for token swaps, ensuring seamless trading activity within the network. Building on this foundation, Perpetual DEXs (Perp DEXs) extend traditional DEX functionality by enabling on-chain trading of perpetual futures. These platforms not only offer leverage and advanced trading strategies but also help retain users within the ecosystem by reducing the need for off-chain alternatives.
Beyond trading, money markets enhance capital efficiency by unlocking liquidity from idle assets, allowing them to be used as collateral for lending and borrowing. This efficiency is further amplified through Liquid Staking Tokens (LSTs) and Liquid Restaking Tokens (LRTs), which enable staked assets to remain productive, improving capital utilisation across the ecosystem. For a deeper dive into how Berachain integrates these financial primitives, refer to our previous piece on Infrared Finance.
Despite the industry's evolution, trading and DeFi remain integral to blockchain ecosystems. DeFi has always been, and will continue to be, one of crypto’s core use cases. Over time, new verticals have emerged to capitalise on this, such as yield farming protocols inspired by early pioneers like Yearn Finance. Today, DeFi has transformed into a system of “money legos”, where users can stack and loop yields across multiple protocols through composable design, attaining a new level of financial flexibility.
Concluding Thoughts
Now comes the more interesting portion. Pre-TGE, Berachain was marketed as a “consumer brypto ecosystem”. At present, Berachain’s DeFi protocols are establishing the financial rails for broader ecosystem growth. As these protocols mature, second-order effects will come into play, with liquidity eventually flowing into consumer-facing dApps once they go live.
Currently, price action throughout the crypto industry has been suppressed due to macro uncertainties such as a possible international tariff war as well as new crypto regulations that have yet to be introduced. Only time will tell if Berachain lives up to the expectations of being a premiere crypto consumer ecosystem. In the meantime, we should BEAR it in mind or better yet, participate in this budding ecosystem.
Ooga Booga 🐻
*Disclosure: Signum Capital holds positions in some of the aforementioned companies. The information provided on this newsletter is for general informational purposes only and does not constitute professional nor investment advice.
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