Band Protocol provides a decentralized data oracle solution that connects smart contracts to external data feeds. As the DeFi economy grows, it is becoming increasingly important for developers to source data for their applications in a secure manner that don’t exist on the blockchain. Here we will look at how BandChain tackles the problem to answer what is Band Protocol, and explain BAND token.
Band Protocol, BandChain, BAND Token
What is Band Protocol?
Band Protocol enables smart contracts to source off-chain data through its decentralized cross-chain oracle network. The protocol’s initial version ran on Ethereum and leveraged bonding curves for data verification much like Zap Oracles. However, this tech saw little adoption from dApp developers. As a result, the team went back to the drawing board and launched BandChain.
BandChain is an independent blockchain for completing oracle based tasks, such as data sourcing, aggregation, disputes, and settlements. Furthermore, it features a delegated proof-of-stake (DPoS) algorithm like Binance Smart Chain to avoid any scalability issues.
BandChain Key Features
- Decentralization: All oracle nodes operate independently. Network security is assured through requirements on staking BAND tokens and reputation. The ranking of an oracle’s reliability and data validity determines its reputation.
- Scalability: BandChain features 2 second block times, which means all data requests will receive a response quickly. Given band oracles operate independently they cannot be bottlenecked by network congestion found on the native blockchain of the DeFi application.
- Flexibility: Data providers can create custom oracle scripts with their aggregation methods. As a result, BandChain can connect to any external data source or APIs. This means Band Protocol could become the largest provider of decentralized data feeds.
- Speed: The blockchain design will facilitate real-time data queries and payments. Smart contracts can query on-demand and will receive a verified response within 4 to 6 seconds. Furthermore, users can pay for exactly what they use instead of any large fixed monthly costs.
- Synchronous query model: Band Protocol can respond to various decentralized application requests from multiple blockchains simultaneously.
- Fast and low cost: Currently many builders choose to implement centralized data feeds into their DeFi farming applications simply because Oracle networks are slow and not cost-efficient.
- DPoS Model: Data providers do not just have their reputation of providing reliable and useful data at stake. Through BandChain they also have money at stake in the form of BAND tokens. This is a direct economic incentive to provide legitimate responses to requests.
- BAND Token: Unlike other Oracle coins, BAND is not just a simple payment method. Because the tokenomics aim to capture the value of the whole protocol.
BAND Token Explained
The use-cases and utility of BAND token include the following:
- Staking: All oracle nodes have to provide collateral in the form of staking BAND tokens. Validators can higher their chance of fulfilling data requests by staking more tokens. If the node underperforms such as having high downtime or provides malicious data then their tokens will be slashed.
- Payments: Users of BandChain will need tokens to pay for transaction and query fees. Additionally, certain providers may create private APIs and choose to put their data access behind a paywall.
- Governance: Decisions such as protocol upgrades and parameter changes to BandChain will happen via on chain voting.
Customizable Oracle Scripts
As mentioned earlier, one of the key features of BandChain is the ability to build customizable oracle scripts. This feature sets BandChain apart from other projects building oracle networks. Essentially, data providers can create their aggregation methodology and even security parameters for validating the data.
It’s permissionless to create and edit an oracle script, meaning anyone can do it. As a result, teams can quickly set up an oracle that’s secured by BandChain’s delegated-proof-of-stake to source data. This enables quick releases and updates, which will ensure data sourcing remains scalable in real-time. Because remember, data sources are usually off-chain centralized databases (stock markets, weather sites, sports results etc…) which may change the way their API works. An oracle provider needs to have the ability to quickly adapt to any changes to avoid downtime and penalties.
Summary: is BAND the best oracle coin?
While Band Protocol will often come up as the biggest Chainlink competitor. One thing to note is that BandChain’s initial mainnet launch happened on June 10th, 2020. While this is a major completed milestone, a lot of the features that make Band Protocol come up in a discussion of the best oracle coin are not yet live. Furthermore, competition is fierce in the form of Tellor, Dia, or Kylin Network – all are trying to overtake LINK.
Currently, the schedule is to release BandChain in four phases, as outlined above. As a result, we should watch the development roadmap during Q1 and Q2 of 2021 closely to see progress. For example, the upcoming onboarding of paid data sources and private APIs could see a big shift of builders integrating BandChain into their dApps. With global investors behind them in the form of Binance, Spartan Group, and more – we expect development during 2021 to move fast!