Shaping Tomorrow. Powered by Berachain.

roots
5 min readSep 30, 2024

--

In recent weeks, our team has focused on fine-tuning a lending protocol that fully leverages Berachain’s Proof of Liquidity (PoL) to deliver an optimized user experience and maximize yield potential. We’re ensuring that both DeFi veterans and newcomers can benefit from the protocol’s capabilities.

To make this mechanism more approachable, the Berachain Foundation has been working tirelessly to break down its complexities. Their efforts center around explaining PoL in a way that highlights its benefits for both users and liquidity providers.

Cami explaining PoL and its incentives.

This mechanism provides an ample opportunity for projects and protocols alike to expand while offering yields that should interest DeFi enthusiasts. Why? Because with Proof-of-Liquidity (PoL) — the validators, the users and the protocols work together to complete the Berachain-specific DeFi flywheel.

You can read more about the whole system here:
https://docs.berachain.com/learn/what-is-proof-of-liquidity

How Roots is Utilizing Proof-of-Liquidity on Berachain

Roots is more than just another DeFi lending protocol. From the outset, when the team presented the concept to the Berachain Foundation, the vision was to build a solution that doesn’t simply utilize assets, but instead leverages the entire chain. While this approach may seem unconventional at first, let’s go over the roles that BEX, BEND, and BERPS (as well as other protocols and assets to be further revealed once Berachain is live) play in the ecosystem reveals why Roots focuses on harnessing the full potential of the chain as its top priority

Flow of funds from providing liquidity all the way to spending your MEAD within the ecosystem.

The protocol will allow for the Users to remain liquid from the Chain’s day one. After providing liquidity, in protocols such as BEX through assets whitelisted to receive BGT, such as HONEY-USDC, they can head over to Roots and deposit their assets into the collateral pool. In exchange, they will mint MEAD, which can then be used across the ecosystem. But what’s the advantage?

Here’s how it works:

The assets in the collateral pool are eligible for BGT emissions, as we only support whitelisted pools. These emissions are delegated to our partner validator(s), and users can claim rewards directly on Roots. There are two types of rewards available:

  1. Native BGT — redeemable for BERA through the standard BGT-to-BERA burn process, as seen on BGT Station.
  2. Non-BGT assets — claimable and usable immediately within the ecosystem.

Users can also stake their MEAD in our innovative “Unified Stability Pool.” This pool diversifies repossessed assets for stakers, that purchase (with a fair premium) the debt from risky or liquidated troves, gaining discounted assets in return.

Additionally, our Real World Assets (RWA) component generates stable returns by deploying yield-bearing assets into RWA pools. These pools offer consistent, though modest, yields, providing stability during bear markets — especially when traditional assets like government bonds perform well. More details on this will be shared in an upcoming article.

To keep it short and simple:

On day one, you bring your assets to Berachain. You want to jump into high-risk tokens but also earn BGT with your solid assets. What’s the solution?

It’s simple. You deposit your BGT-earning assets as collateral on Roots. In return, you mint MEAD, which you can then use freely in the ecosystem — including for riskier plays. Meanwhile, your collateralized assets continue earning BGT, which can either be claimed directly or converted into other assets. This allows you to stay liquid and flexible while maximizing your yield.

What is being accumulated in the backend of roots. User, protocol and yield pipeline.

Why Use Roots?

The real question is: why not use Roots? The protocol lets users borrow against yield-generating assets with no interest and minimal fees. By minting MEAD, users unlock liquidity that was previously inaccessible, driving ecosystem growth. But that’s just the start.

As one of our developments — Roots has partnered with Infrared to offer iBGT as collateral, addressing a critical detail often overlooked by competitors: Infrared shares additional yield from its validator. When users collateralize iBGT, Roots stakes it while idle, allowing users with active, unliquidated positions to continue earning yield from Infrared.

Roots seamlessly integrates a vault system within the lending protocol, eliminating the need for a separate vault for liquid staking tokens (LSTs). Instead, we issue a stablecoin that strengthens the ecosystem while increasing yield through BGT emissions, stable returns, and additional rewards from incentives or the Infrared staking pool.

In short, we offer stiBGT, in the form of iBGT, to ensure the entire ecosystem flourishes.

Current options on Pre-Testnet of roots — offering not only yield earning assets, but also unlocking liquidity via minting MEAD against the displayed assets. Disclaimer: This is all subject to change / revision.

What’s next for roots?

In Short, We’re Just Getting Started.

Since announcing in June that we’d be launching on Day 0 of Berachain, the entire team has been working non-stop to deliver a top-tier product that’s almost ready for the bArtio Testnet. Our ambition is clear, and the next phase will show just how committed we are. With the Testnet release approaching and the Real World Assets (RWA) component soon to be integrated into Roots, we’re excited to announce that “Stage I” is nearly complete.

But there’s so much more to Roots. If you’re wondering why a lending protocol on Beraland (on Earth) is talking about shaping the future, you’re in for a surprise. Let me explain: Roots is divided into two stages. Stage I is a decentralized lending protocol driven by the Proof-of-Liquidity mechanism, offering rewards for collateralizing your assets. Internally, we call this the “first layer,” but to you, it’s simply the Roots you know.

Stage II? Thoon.

Think Bigger.

Our ultimate goal isn’t just to be a lending protocol — it’s to change the world. Powered by Berachain and its unique Proof-of-Liquidity system, Roots is laying the foundation for the next generation of transformative DeFi projects, showcasing the full potential of decentralized finance.

What started as a small project is now pushing the boundaries of what’s possible in finance. This evolution is why our new slogan is:

“Shaping Tomorrow. Powered on Berachain.”

--

--

roots
roots

Written by roots

Shaping Tomorrow. Powered by Berachain.

No responses yet