# How Beracana Works

Beracana is designed to enhance liquidity and yield farming potential within the Berachain ecosystem. The protocol lets users lend, borrow, and leverage their assets to maximize rewards, particularly BGT (Bera Governance Token). Through partnerships with dApps like **Beradrome**, **Infrared** **Finance,** and **Beraswap**, Beracana facilitates a multi-layered approach to liquidity provision, allowing users to optimize their returns on both sides of the market.

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By providing liquidity or borrowing assets to amplify farming, users can get significantly more BGT without having to deploy large amounts of capital upfront. Beracana creates a dynamic system where users can lend or borrow to fit their individual strategies while participating in the overall growth of the Berachain ecosystem.

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### A. Lending / Supplying

Users can deposit **BERA, wBERA, or NECT** into the protocol. These deposits are pooled and lent to borrowers.\
In return, lenders receive:

* **canaBERA** (for BERA or wBERA deposits)
* **canaNECT** (for NECT deposits)

These interest-bearing tokens accrue yield over time. Interest rates increase with utilization, allowing lenders to benefit from borrower demand.

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### B. Borrowing / Leveraging

Borrowers can deposit assets and borrow up to:

* **5x** on BERA / wBERA
* **7x** on NECT

Borrowed funds are routed into leveraged vault strategies across **Infrared**, **Berapaw**, **RootsFi**, **Beradrome**, **Kodiak**, and **Burrbear**.

Users select leverage at deposit. Beracana automates LP creation, farming, compounding, and rebalancing.

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### C. Strategy Flow (Simplified)

1. Deposit collateral (e.g., wBERA or NECT)
2. Borrow assets up to allowed leverage
3. Assets are auto-routed to highest-yielding vaults
4. Rewards are harvested (e.g., BGT, iBGT, LBGT)
5. Rewards are converted and auto-compounded back into LPs
6. Loop continues every 4 hours

No manual management needed — just set and forget.

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### D. Health Factor

The **Health Factor (HF)** determines loan safety. A higher HF = safer position.

* **HF < 1** triggers liquidation
* Health factor is affected by collateral value, borrow amount, and accrued interest
* Users can add/remove collateral or repay debt to adjust HF

Health factors vary by asset type and leverage level.

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### E. Liquidation

If a user’s health factor drops **below 1.0**, their position becomes eligible for liquidation.

* A liquidation bot (or keeper) repays a portion of the debt
* Collateral is partially sold to repay the loan
* The liquidator earns a small fee
* The rest of the user’s position is preserved

Beracana minimizes liquidation risk through robust vault design and real-time health tracking.

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