Overview
Infrared Finance is a liquid staking and yield protocol built for Berachain's Proof of Liquidity (PoL) ecosystem. Its core product is iBGT — a liquid staking token representing staked BGT (Berachain Governance Token). In Berachain's PoL system, BGT is earned by providing liquidity and must be delegated to validators, but it's non-transferable. Infrared solves this by providing a liquid wrapper (iBGT) that represents BGT delegation, unlocking DeFi composability.
Think of Infrared as Berachain's equivalent of Lido for Ethereum: it abstracts away the staking complexity and provides a liquid token that can be used in lending, DEXs, and other DeFi protocols. This is critical for Berachain because BGT's non-transferable nature means without liquid staking, users can't efficiently compose their PoL positions with other DeFi activities.
Infrared also offers vaults that automate yield strategies across Berachain's PoL ecosystem — depositing into approved liquidity pools, harvesting BGT rewards, and reinvesting. These vaults simplify the multi-step PoL participation process into one-click products.
Smart Contracts
Infrared's smart contracts handle BGT delegation, iBGT minting/burning, vault strategies, and auto-compounding logic. The liquid staking contracts maintain the BGT-to-iBGT peg through redemption mechanisms. Vault contracts interact with Berachain's PoL gauges, Kodiak pools, and other ecosystem protocols to harvest and reinvest rewards.
The architecture is similar to established liquid staking protocols (Lido, Rocket Pool) adapted for Berachain's unique BGT mechanics. The composability layer — allowing iBGT to be used across DeFi — requires integration contracts with lending markets, DEXs, and other protocols. Contract complexity is moderate with well-understood patterns.
Security
The liquid staking mechanism introduces standard LST risks: smart contract risk, depeg risk if redemptions are constrained, and validator delegation risk. Infrared's security depends on proper BGT delegation management and the integrity of the iBGT peg mechanism. Audits have been conducted, though the Berachain PoL integration is novel enough that edge cases may emerge. The non-transferable nature of BGT means the staking mechanism involves trust in Infrared's delegation choices.
Liquidity
iBGT liquidity is critical for the protocol's utility — if iBGT can't be easily traded, the liquid staking proposition fails. Infrared has established deep iBGT liquidity pools on Berachain DEXs, and iBGT is widely integrated as collateral in lending protocols. The vault products also attract significant deposits as users seek simplified PoL participation. Overall liquidity metrics are strong for Berachain's ecosystem maturity.
Adoption
Infrared has become essential Berachain infrastructure. iBGT adoption is widespread across the ecosystem, used as collateral in lending markets, traded on DEXs, and integrated into yield strategies. The vaults attract users who want PoL exposure without managing positions manually. Infrared's TVL represents a significant share of Berachain's total DeFi activity, reflecting its middleware position in the ecosystem stack.
Tokenomics
The IRED token provides governance over protocol parameters including validator delegation strategy, fee structures, and vault management. Revenue from protocol fees (cut of BGT rewards) creates fundamental value accrual. The flywheel between iBGT adoption, protocol revenue, and IRED token value is well-designed, following proven liquid staking economics. The critical variable is BGT emission rates and overall Berachain DeFi activity.
Risk Factors
- Berachain dependency: Entirely reliant on Berachain's success and PoL mechanics
- iBGT depeg risk: Market stress could cause iBGT to trade below BGT value
- Smart contract risk: Multi-protocol interactions increase attack surface
- Validator delegation: Infrared's delegation choices affect security and returns
- New ecosystem: Berachain PoL is unproven over long time horizons
- Competition: Other liquid staking protocols may emerge on Berachain
Conclusion
Infrared Finance fills an essential role in Berachain's PoL ecosystem — it's the Lido of Berachain, making BGT composable through liquid staking. The protocol's positioning as middleware infrastructure means it captures value from ecosystem growth without competing directly with DEXs or lending markets. The iBGT product is genuinely useful and widely adopted. As with all Berachain protocols, the fundamental bet is on PoL's viability and Berachain's ecosystem growth. If those materialize, Infrared is among the best-positioned protocols to benefit.