Extended vs. Replicated Proof of Liquidity (Flywheels)

Sunrise
3 min readOct 10, 2024

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Hi, it’s Chris. Today I’m back with a very short blog describing the differences between the Extended PoL and Replicated PoL flywheels on Sunrise, to help answer, “when exactly does Sunrise tap into Berachain Proof of Liquidity, and when does it not?” Our goal is to help users better understand this relationship, so they can eventually choose which flywheels to utilize on the Sunrise mainnet.

Sunrise DA Layer integrates Proof of Liquidity (PoL), however the actual flywheel that the underlying assets interact with can vary, maximizing flexibility in rollup development and providing further customization for Sunrise builders.

The 𝗘𝘅𝘁𝗲𝗻𝗱𝗲𝗱 𝗣𝗼𝗟 flywheel extends Berachain PoL to the L2 level via Sunrise DA. This PoL composition directly taps into Berachain flywheels, now with compatibility for modular blockchain structures. For example, Sunrise can natively integrate the LST of Berachain’s governance token (iBGT), allowing a rollup developer to use a pool comprised of the L2 native token and iBGT. With Sunrise’s fee abstraction, the rollup developer can simply provide liquidity to this pool in exchange for blobspace.

In the case of a sovereign rollup, this pool can also serve as a Proof of Liquidity pool for the rollup itself; therefore, the liquidity of the rollup is composed of both the liquidity and security of the L2 native token and the iBGT within the pool. As Berachain PoL expands, so does iBGT, benefitting the L2. Liquidity providers for this pool receive LP yield in the form of the L2 token, iBGT, and vRISE rewards. (vRISE being the bonded governance token of Sunrise, equivalent to Berachain’s BGT token). vRISE rewards can be converted back to iBGT (vRISE -> RISE -> iBGT). Eventually, this operation will be possible on Sunrise with a single click. This setup enables liquidity providers and rollup developers to participate directly in Berachain Proof of Liquidity flywheels with the extra iBGT earned, while using Sunrise DA and retaining all its unique advantages.

The 𝗥𝗲𝗽𝗹𝗶𝗰𝗮𝘁𝗲𝗱 𝗣𝗼𝗟 flywheel works similarly, except in this scenario, the rollup developer chooses not to interact with Berachain PoL directly. As a result, the PoL mechanism is replicated; any new pool can be created and used as the Proof of Liquidity pool for the rollup. Since Sunrise operates as a liquidity aggregator, the rollup developer can benefit from the combined liquidity and security of multiple external ecosystems.

An example of this would be using bridged Solana assets via Wormhole to bootstrap the liquidity and security of a rollup on Sunrise (e.g. L2 token paired with SOL). A fun application of this mechanism includes using memecoin liquidity to bootstrap a rollup, though this is more an illustration of capability rather than practicality. The various assets supported by Sunrise are constantly expanding, as Sunrise adopts IBC as its interoperability standard.

Ultimately, the decision to tap into Berachain PoL or not is up to the individual developer. However, the existence of both Extended PoL and Replicated PoL on Sunrise provides maximum flexibility for any Sunrise user. 🌅

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Sunrise
Sunrise

Written by Sunrise

Sunrise - specialized DA Layer for Proof of Liquidity. 🌅 Visit us at sunriselayer.io

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