Crypto Gloss

Infrared Finance

Infrared Finance is Berachain’s native liquid staking and meta-validator protocol — solving BGT’s non-transferability by issuing iBGT (a liquid, transferable receipt for staked BGT), operating as a super-validator that aggregates BGT voting power and directs it optimally across Berachain’s DeFi ecosystem, and producing iHONEY and iBERA as additional yield-bearing tokens to extend Berachain’s Proof of Liquidity rewards into composable DeFi.

Overview

Berachain’s Proof of Liquidity (PoL) design makes BGT (Bera Governance Token) the critical economic primitive — validators earn BGT and direct it to DeFi protocol gauges, LPs earn BGT, and BGT holders can burn BGT 1:1 for BERA. But BGT has a critical limitation: it is non-transferable. Users earn BGT from LP positions but cannot sell it, trade it, or use it as DeFi collateral. Infrared Finance solves this with iBGT — a liquid, ERC-20 wrapped version of BGT — while simultaneously acting as a “meta-validator” that aggregates delegated BGT voting power to optimally allocate across Berachain gauges for maximum ecosystem yield.

iBGT: Liquid BGT

The following sections cover this in detail.

Problem: BGT is Non-Transferable

  • BGT earned by Berachain LPs cannot be transferred to another address
  • BGT can only be either: held (for governance) or burned for BERA (1:1, irreversible)
  • This prevents BGT from being: used as DeFi collateral, traded on DEXes, or composed in yield strategies

Infrared’s Solution: iBGT

  1. User earns BGT from Berachain LP participation
  2. User deposits BGT into Infrared → receives iBGT (1:1 ratio, ERC-20)
  3. iBGT is fully transferable and tradeable (DEX liquidity on BEX/Kodiak)
  4. iBGT is usable as DeFi collateral, yield strategy input, or protocol composability
  5. iBGT holders can redeem for BGT at any time (subject to queue if Infrared’s BGT is delegated)

iBGT DeFi Composability

  • Trade iBGT on DEXes for BERA or other Berachain assets
  • Use iBGT as collateral in Berachain lending protocols
  • Earn iBGT by providing liquidity in Infrared-boosted pools
  • Compound iBGT automatically with Infrared’s yield optimizer vaults

Meta-Validator Role

Infrared operates as a Berachain validator itself:

  1. Infrared validator earns BGT from block production
  2. BGT accumulated by Infrared validator is delegated to Infrared’s protocol BGT pool
  3. Infrared’s governance optimizes BGT direction across ecosystem gauges
  4. BGT direction choices influenced by bribe income (protocols pay to have Infrared direct BGT to their pools)
  5. Bribe income distributed to iBGT holders as yield

This makes Infrared a BGT allocation market on Berachain:

  • Protocols compete for Infrared’s BGT direction by paying bribes
  • Infrared aggregates BGT from many validators (not just its own) via delegation
  • Total yield for iBGT holders = staking BGT yield + validator block rewards + bribe income

iHONEY: Yield-Bearing HONEY

Infrared extends its model to HONEY (Berachain’s native stablecoin):

  • Deposit HONEY → receive iHONEY (yield-bearing HONEY wrapper)
  • iHONEY earns yield from Infrared deploying HONEY into BEX pools and earning BGT
  • BGT earned from HONEY LP positions flows to iHONEY holders
  • iHONEY enables stablecoin holders to access Berachain PoL yield without active LP management

iBERA: Liquid Staked BERA

  • Deposit BERA → receive iBERA (liquid staked BERA)
  • iBERA earns BERA staking yield (from validator block reward BERA component)
  • Also earns portion of Infrared’s bribe income denominated in BERA/ecosystem tokens

Ecosystem Role

Infrared serves as Berachain’s “liquid staking layer” analogous to:

  • Lido on Ethereum (liquid ETH staking → stETH)
  • Stride on Cosmos (liquid ATOM staking → stATOM)
  • But extended with Berachain’s PoL-specific BGT yield optimization layer

Infrared is arguably the most important Berachain DeFi protocol because:

  • BGT liquidity (iBGT) is foundational for all other Berachain DeFi
  • Infrared’s bribe market determines where Berachain’s DeFi liquidity is deepest
  • iBGT composability unlocks yield strategies impossible with native BGT

Sources

  1. Infrared Finance Documentation — Infrared Finance Team, 2024–2025. Core Infrared documentation covering the iBGT mechanism (BGT deposit → iBGT issuance, 1:1 ratio maintenance, redemption queue mechanics when BGT is delegated), meta-validator operation (Infrared runs as Berachain validator, earns BGT, receives delegation from other validators, aggregates BGT voting power), bribe income distribution (protocols pay HONEY/USDC bribes for BGT direction; bribe yield distributed to iBGT holders), and iHONEY/iBERA product designs.
  1. “BGT Liquidity: Infrared iBGT and Berachain’s Non-Transferability Solution” — Berachain Research / DeFi Protocol Analysis, 2025. Analysis of Infrared’s iBGT solution to BGT’s non-transferability constraint — examining the mechanism design (why BGT must be non-transferable for governance integrity vs why iBGT doesn’t compromise this), iBGT market depth on Berachain DEXes, the governance implications of iBGT (does Infrared’s aggregated BGT voting create dangerous governance centralization?), and alternative approaches to BGT liquidity.
  1. “Infrared’s Bribe Market: Protocols Competing for BGT Direction” — Berachain DeFi Analytics, 2025. Detailed analysis of the BGT bribe market that Infrared’s meta-validator role enables — which protocols bribe Infrared for BGT direction, bribe amounts and bribe-per-BGT efficiency metrics, how the bribe income flows to iBGT holders as yield, and the comparison between Berachain’s bribe market (BGT-based) and Ethereum Curve/Velodrome gauge bribe markets.
  1. “iHONEY: Stable Yield in Berachain’s PoL Economy” — Infrared Finance / Stablecoin Research, 2025. Analysis of iHONEY as Berachain’s primary stablecoin yield product — how Infrared generates yield on HONEY (BEX/Kodiak LP → BGT → iBGT → iHONEY holders), iHONEY APY sustainability, comparison to USDC yield products on other chains (where does iHONEY APY come from vs sDAI/Aave USDC yield), and iHONEY’s role in maintaining HONEY’s liquidity and peg stability.
  1. “Infrared Finance vs Lido vs Stride: Liquid Staking Cross-Chain Comparison” — Liquid Staking Research / DeFi Analytics, 2025. Cross-protocol comparative analysis of Infrared (Berachain iBGT), Lido (Ethereum stETH), and Stride (Cosmos stATOM) as liquid staking solutions — examining the unique aspects of Infrared’s design that PoL-specific requirements impose vs standard PoS liquid staking, the governance token role (sLDO vs stSTRD vs Infrared governance), and the centralization risks of each protocol relative to decentralization goals.

Related Terms