🐻⛓️ Berachain Bend Docs

Appearance

Bend And Proof-Of-Liquidity 🤝 ​

Proof-of-Liquidity (PoL) is Berachain's unique consensus mechanism. This mechanism revolves around the idea that the chain's economic incentives ($BGT) should flow to active users providing productive liquidity to the chain.

Bend, as a native Berachain dApp, aims to provide access and utility to the chain's native stablecoin $HONEY. Bend achieves this by enabling users to earn $BGT rewards by borrowing $HONEY. This achieves a few objectives:

  1. It incentivizes users to borrow $HONEY and deploy it in composable DeFi strategies (e.g. leverage, yield farming, etc).
  2. It provides a baseline yield to $HONEY holders, produced from the interest paid by borrowers.

How to Earn $BGT with Bend ​

There are a few steps involved to borrow $HONEY and earn $BGT, since all loans on Bend are overcollateralized. These steps are outlined below:

  1. Deposit collateral to Bend (e.g. WETH) - this provides a collateral balance for users to take loans out against.
  2. Borrow $HONEY - users can borrow $HONEY against their deposited collateral.
  3. Finally, users with $HONEY loans can Claim $BGT they have earned.

Liquidation Risk

Although the most rewards are earned by borrowing maximal amounts of $HONEY, users should carefully balance this with managing their liquidation risk

Looping Loans

$HONEY is not enabled as a collateral asset, so it is not possible to loop $HONEY borrows and deposits for the purpose of earning more $BGT

PoL Interactions ​

Those familiar with PoL may realize that earning $BGT on Bend is different from the usual flow of depositing on BGT Station. The following diagram illustrates the unique sequence of interactions between Bend and PoL:

Bend & Proof Of Liquidity

When borrowing $HONEY, an equivalent amount of $vdHONEY tokens are minted, representing the user's growing debt obligations. These two tokens are sent to users' wallets.

PoL Reward Vault ​

Concurrently in the borrow transaction, Periphery HONEY tokens are minted and staked on behalf of users in a BGT reward vault, which produces $BGT emissions dedicated to Bend borrowers. Users can Claim BGT rewards on the Bend UI.

When users repay their $HONEY loans, their Periphery HONEY tokens are unstaked and burned, meaning they stop earning $BGT rewards. Any pending rewards are automatically claimed.