Whitepaper
Abstract
beraBTC is a Bitcoin-pegged token that allows users to mint wrapped Bitcoin directly using on-chain assets on EVM chains. It features on-chain governance and decentralized settlement capabilities.
Bitcoin has become the most valuable asset in both the Web3 space and the global financial landscape. However, decentralized financial activities involving Bitcoin on EVM chains are still in their early stages—and even lag behind traditional financial markets.
While several similar products exist in the market, none have effectively solved the entry barrier for EVM users into BTC-Fi. The beraBTC system, with its unique issuance mechanism, opens the door to BTC-Fi for more EVM users. At the same time, it leverages the PoL (Proof-of-Liquidity) model to capture DeFi yields and contribute high-quality TVL to the PoL ecosystem.
Chapter 1: Ecosystem Overview
1.1 The EVM Multi-Chain Ecosystem
EVM is the core technology of Ethereum, elevating blockchain from version 1.0 to 2.0 and marking a significant milestone in industry development. However, EVM is not exclusive to Ethereum; similar to how Zero-Knowledge (ZK) technology has been adopted by multiple blockchains, more blockchain networks using EVM as their smart contract execution mechanism are expected to emerge, collectively forming a vast EVM multi-chain ecosystem. In this ecosystem, developers do not need to repeatedly develop foundational functionalities, as existing mature technical frameworks can be migrated across chains at a low cost, significantly accelerating ecosystem growth.
1.2 BTC-Fi
Bitcoin has achieved global consensus, a recognition that continues to strengthen over time. As a successful social experiment, Bitcoin's success model is irreplicable by other assets. Bitcoin reserves enormous financial value, and when DeFi products integrate BTC assets, the total locked value (TVL) can reach staggering levels. However, Bitcoin's network economic incentives are solely directed toward miners and do not positively incentivize financial applications such as BTC-Fi. This lack of incentives is a key reason for the slow development of BTC-Fi.
1.3 Proof of Liquidity
The core advantage of Berachain's Proof of Liquidity (PoL) mechanism lies in its dual-token system ($BERA and $BGT), which decouples security from liquidity while establishing a three-way incentive loop between protocols, validators, and users. Validators compete for protocol rewards through optimized reward allocation, while users contribute liquidity to earn governance tokens and participate in ecosystem development. This dynamic equilibrium fosters a positive feedback loop between liquidity provision and token value reinforcement, while high staking thresholds and elastic emission mechanisms effectively mitigate Sybil attacks, ensuring a balance between capital efficiency and network security.
Chapter 2: Introduction to beraBTC
2.1 Features
beraBTC is the first Bitcoin derivative protocol built on Berachain's Proof-of-Liquidity (PoL) model, enabling Bitcoin asset liquidity proof within the EVM multi-chain ecosystem through an innovative three-layer value model. As a decentralized Wrapped Bitcoin protocol, its core design integrates an over-collateralization mechanism with on-chain governance securitization functionality.
2.2 EVM Multi-Chain Compatibility
The smart contract layer of beraBTC is fully compatible with the EVM architecture, supporting:
Cross-Chain Asset Minting: Users can mint beraBTC by over-collateralizing with Honey or other assets on any EVM chain.
Seamless Contract Migration: Wrapper contracts based on the standard ERC-XXX protocol can be deployed across all EVM-compatible chains.
Real-Time Price Oracle: Integrated with Berachain’s native oracle network, enabling sub-second BTC price updates.
This compatibility advantage allows beraBTC to be rapidly deployed across Berachain and other EVM-compatible chains, forming a multi-chain liquidity network.
2.3 Liquidity Proof Economic Model
beraBTC redefines the economic incentive mechanism of traditional wrapped asset protocols:
Minting Incentives: Users receive BVT rewards for minting beraBTC using non-stablecoin assets.
Governance Securitization: BVT tokens grant holders the right to share in protocol revenue distribution.
Risk Hedging: Liquidation penalties are injected into an insurance fund, with BTT holders having priority claims.
2.4 BatoshiDAO Governance Structure
An innovative three-layer governance architecture:
BeraBTC (Base Value)
Batoshi Venture (Protocol Value Accrual)
BVT (Governance Premium)
Chapter 3: BatoshiDAO Governance Framework
3.1 BeraDAO Value Capture Paradigm
This protocol innovatively integrates traditional asset management theories into decentralized asset protocols, establishing a "Pegged Asset+" composite value model. Compared to traditional wrapped asset protocols (e.g., WBTC), which rely solely on price-pegging mechanisms, beraBTC leverages Batoshi DAO to implement a three-tier value generation model:
3.1.1 Layer 1: BeraBTC (Fundamental Value)
BeraBTC is minted through over-collateralization with Honey, maintaining a price peg to BTC and inheriting Bitcoin’s core function as a store of value.
3.1.2 Layer 2: Batoshi Venture (Protocol Value Accretion)
Batoshi Venture functions as the strategic capital allocation entity, converting idle custodial assets into productive capital. By employing risk-adjusted return strategies, it generates excess returns (α) while ensuring principal security. This value creation layer allows beraBTC holders to benefit from capital appreciation, which traditional wrapped assets cannot offer.
Batoshi Venture Seat Selection Criteria
1. Qualification Layer
Minimum Staking Requirement: 1,000,000 BVT (dynamically adjusted, targeting 0.1% of circulating supply).
Governance Proposal Requirement: Must submit an investment strategy framework and an initial investment proposal.
Reputation Threshold: DAO contribution score ≥ 70, with no malicious voting records in the past four cycles.
2. Voting Layer
Dual Weighting Mechanism:
Anti-Whale Mechanism: No single address can hold more than 20% of total votes.
3. Seat Allocation
A new seat allocation cycle occurs quarterly:
Professional Seats
2
Automatically granted to top DeFi protocols by TVL ranking.
Community Seats
2
Assigned to the top two candidates via direct BVT voting.
Strategic Seat
1
Nominated and elected by existing seat members.
4. Circuit Breaker Mechanism
Mandatory Rotation: If a seat generates negative returns for two consecutive cycles, it is forcibly rotated out.
Decentralization Protection: No single entity can hold more than one seat.
Emergency Trust Vote: beraBTC holders can initiate a vote of no confidence in case of critical issues.
3.1.3 Layer 3: BVT (Governance Premium)
The BVT token securitizes the value accrual layer’s revenue rights, establishing a unique "Dual-Token Feedback Loop."
Economic Principles Behind the Mechanism
Internalizing Externalities: Asset management yields, traditionally monopolized by custodial institutions, are transformed into a public good through smart contracts, shifting centralized profits to community-based revenue.
Intertemporal Incentive Compatibility: The BVT rewards granted to minters incorporate discounted expectations of future earnings, ensuring consistency in time preferences.
Reinforcing Network Effects: Protocol revenue growth → BVT value appreciation → Enhanced minting incentives → Capital pool expansion, forming a positive feedback loop.
This model enables beraBTC to maintain price stability while introducing a governance-backed securitization mechanism via BVT, creating a new value accumulation paradigm for decentralized financial assets—one that fundamentally differentiates it from traditional wrapped asset protocols.
3.2 DAO Treasury Engine Architecture
The protocol establishes a multi-dimensional value capture mechanism to ensure that the DAO treasury possesses sustainable self-growth capabilities, building a diversified asset reserve resilient to inflation and risk.
Management Fee Revenue: Includes income generated from beraBTC minting, redemption, and liquidation processes.
Proof-of-Liquidity (PoL) Yield Rights: A portion of each PoL emission cycle is pre-allocated as a development fund for the protocol.
Strategic Capital Returns: Batoshi Venture allocates part of its investment returns to the foundation.
BVT Protocol Revenue: Includes revenue from BVT bond sales, trading fees from BVT liquidity pools, and other protocol-granted sources.
Chapter 4: Economic System
4.1 beraBTC Minting Mechanism
beraBTC adopts a hybrid issuance model based on the wrapped BTC approach. It supports both 1:1 BTC-pegged minting and over-collateralized minting via Honey to ensure asset security and enable decentralized custody services.
beraBTC is price-pegged to Wrapped BTC, with automatic price tracking enabled through on-chain oracle contracts.
4.2 BVT Allocation Model
4.2.1 Token Supply & Release Schedule
Total Supply: 1,000,000,000 (1 billion) BVT tokens
Distribution breakdown:
Node Sales (Private Round)
100,000,000
10.00%
6
Institutional Funding
40,000,000
4.00%
5
KOLs Funding
10,000,000
1.00%
3
Strategic Funding
10,000,000
1.00%
3
Team
150,000,000
15.00%
12
Treasury
50,000,000
5.00%
-
Mining Distribution
600,000,000
60.00%
-
Marketing
40,000,000
4.00%
-
4.2.2 Token Distribution Mechanism
Private round: 10% of tokens are pre-sold. After purchase, each node releases rewards linearly over 6 months.
Institutional funding: 4% of tokens distributed, unlocked over 5 months.
KOL and strategic funding: 2% of tokens allocated, unlocked over 3 months.
Team allocation: Tokens are locked for 12 months before being released.
Remaining tokens: Managed by the treasury and utilized based on community governance and market voting.
Chapter 5:BVT Value Empowerment System
5.1 Decentralized Governance Engine
Establish a tiered governance framework to enable precise decision-making and control：
Parameter Governance Layer: Adjusts key risk parameters such as collateralization ratios and liquidation penalties (quarterly voting).
Strategic Decision Layer: Approves/rejects Batoshi Venture investment plans (proposal submission requires a bond deposit).
Protocol Upgrade Layer: Smart contract iterations require dual-majority approval (>66% of both token holdings and Venture seats).
Innovative Mechanism: Introduces a "Governance Execution Delay" feature—critical proposals are locked for 72 hours post-approval to prevent flash governance attacks.
5.2. Value Capture
Participate in the BVT growth flywheel through multiple channels, providing the ecosystem with greater room for expansion. As the ecosystem grows, participants benefit from both the increasing quantity and value of BVT. Revenue sources include protocol income, BTC appreciation in the treasury, investment returns, PoL (Proof-of-Liquidity) income, and BVT growth earnings.
5.3 Governance Rights Securitization
Governance power is derived through the veBVT model:
Voting Power = Staked Amount ×*(min(Stake Duration, Max Lock Period) / Max Lock Period + 1)*
Delegation Mechanism: Allows users to delegate their voting power to professional governance entities.
Design Logic:
Users select their stake duration (from 1 week to 1 year).
Voting power increases linearly with lock-up duration.
Time decay mechanism: Voting power linearly decreases over time.
At the maximum lock-up period (1 year), users receive full 1:1 voting power.
Economic Impact: By linking governance participation with token lock-up periods, long-term holders are rewarded with surplus governance power and benefits.
5.4 Protocol Risk Hedging Tools
BVT holders automatically receive:
Priority access to liquidation profits.
Insurance fund claims (in extreme events, BVT holders can apply for compensation proportional to their holdings).
Exclusive subscription rights to future protocol products.
This structure elevates BVT beyond a traditional governance token, transforming it into a financial instrument that encapsulates protocol risk and rewards, pioneering the "Governance-as-a-Service" (GaaS) paradigm.
5.5 Investment Participation Securitization
By staking BVT, users gain decision-making rights and revenue-sharing privileges in Batoshi Venture’s investment activities:
Personal Yield Factor = Individual Staked BVT × sqrt(Weighted Average Stake Duration)
Personal Yield Share = (Personal Yield Factor / ∑ Personal Yield Factors) × BVT Surplus Returns
Innovative Mechanisms:
Dynamic Staking Weighting: Continuous participation inherits 50% of previous stake duration weighting.
Anti-Collusion Design: Staked amounts from related addresses are aggregated to prevent manipulation of yield weighting.
Liquidity Discount: Early unstaking incurs a 25% yield penalty.
References
Core Technical Documentation
[1] Berachain Team. (2023). Proof of Liquidity Overview. Berachain Documentation. Retrieved from: https://docs.berachain.com/learn/pol/
[2] BeraBridge Protocol. (2023). Cross-Chain Communication Whitepaper. GitHub Repository. Retrieved from: https://github.com/berachain/berabridge/blob/main/whitepaper.pdf
[3] The Block Research. (2023). Liquidity Mining Report Q3 2023. Retrieved from: https://www.theblock.co/research
[4] DeFi Llama. (2023). Berachain Ecosystem Dashboard. Retrieved from: https://defillama.com/chain/Berachain
[5] Buterin, V. (2014). A Next-Generation Smart Contract and Decentralized Application Platform. Ethereum Whitepaper. Retrieved from: https://ethereum.org/en/whitepaper
[6] Nakamoto, S. (2008). Bitcoin: A Peer-to-Peer Electronic Cash System. Retrieved from: https://bitcoin.org/bitcoin.pdf
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