What Is Band Protocol: Real-World Data For All

Oracles played a crucial role in ancient Greece and Rome. They were the supernatural link between the gods and humans. If you’ve heard of blockchain oracles, the concept isn’t far from the above description — minus the deity drama!

Smart contracts, with their immutable storage and ability to verify transactions, are at the core of blockchain technology. However, their scalability has been limited by access to real-time data and accurate price feeds from off-chain sources.

That’s where oracles such as Chainlink and Band Protocol come in — to connect real-world data to blockchains. While Chainlink may have gotten a head start in this niche, Band Protocol has risen as its worthy competitor.

Let’s explore the Band Protocol ecosystem and its role in the decentralized economy.

The Oracle Solution In Blockchain

Part of the reason why blockchain as a technology has caused such a stir around the globe is due to its closed data system. Each blockchain ensures its security and operational efficiency by creating in-house data silos.

While such a design has its merits of privacy and anonymity, challenges arise when there’s a need to communicate with other blockchains or receive external data.

Let’s look at smart contracts briefly. One of their strengths is that they automatically execute, based on the code fed into them during deployment. Such programmable functionalities have opened a world of opportunities, such as decentralized applications (DApps) and a wide range of DeFi products.

However, these smart contract–powered applications have to depend on third-party sources to obtain real-world data. For example, a DeFi application such as Aave needs accurate data for users to engage with its crypto lending platform.

Most of this data needs to be sourced from traditional web sources and APIs. Unfortunately, the majority of these data solution providers are faced with the limitations of centralization, network congestion and high operation costs. Such limitations pose a threat to trustlessness and decentralization, which are the pillars of blockchain.

Source: BandChain docs.

Fortunately, oracles such as Band Protocol were created to fill that void of precise, accurate and reliable data exchange between blockchains. As a decentralized oracle network, it leverages consensus to provide a middle layer that links blockchain applications with external information sources.

Source: Band Protocol

What Is Band Protocol?

Band Protocol is a decentralized, cross-chain data oracle that acts as a bridge between smart contract platforms and real-world data sources to ensure secure and scalable interoperability. It plays a critical role in sourcing and aggregating data from multiple blockchains, cryptographically verifying it, and then packaging it into an easy-to-use format.

Founded in 2017 by three experienced MIT builders — Soravis Srinawakoon (CEO), Sorawit Suriyakarn (CTO) and Paul Nattapatsiri (CPO) — Band Protocol is on a mission to provide a decentralized oracle framework for web3.

With features such as monetized data provision, verifiable random function and real-time price information, Band Protocol is at the forefront of the decentralized oracles powering blockchain.

Initially built on the Ethereum blockchain, Band Protocol migrated to Cosmos in 2020 using its innovative SDK to leverage the network’s low gas fees and optimized costs. Through the integration with Cosmos, developers can unlock cross-chain functionalities using the Cosmos Inter-Blockchain Communication (IBC) protocol.

Using its native token, BAND, to incentivize and secure the protocol, Band Protocol seeks to provide a high-performance and dependable blockchain oracle for smart contract platforms. Some of the notable DApp projects that have partnered with Band Protocol include Celo, Moonriver, Astar, Oasis and Cronos.

What Is BandChain?

BandChain is a data oracle public blockchain built on Cosmos SDK that acts as a medium between data sources and smart contract platforms powering DApps. Its blockchain is operated by over 72 validators, who ensure the chain remains decentralized. It relies on the Tendermint BFT consensus algorithm to ensure immediate block finality.

The roles of BandChain are to handle requests raised by DApps and to query data from respective providers, then relay the results back to the DApp as shown below:

Source: BandChain docs

Let’s look at some of the unique features that make BandChain stand out.

Decentralization

BandChain’s design uses two separate layers of decentralization to ensure maximum redundancy. First, the data oracle is operated by a pool of validators distributed around the globe. Their performance can be easily monitored and verified.

BandChain’s delegated proof of stake (DPos) mechanism ensures that validators are incentivized to report data properly and accurately. The flow of data from request to submission is available to be viewed and audited by the public.

Data Flexibility

BandChain’s oracle scripts are customizable in multiple programming languages, and flexible for the user to curate the data feed they desire. BandChain’s data source scripts allow validators to freely determine where they’ll source their data.

Scalability

Unlike other mainstream blockchains, such as Bitcoin and Ethereum, BandChain is built exclusively to compute and request oracle data.

As such, the average block validation time on the oracle is only 3 seconds, while it can take up to 10–15 seconds on Ethereum and around 10 minutes on Bitcoin to confirm a transaction. Such speed ensures that data requests are received and processed quickly.

Another benefit of an oracle-focused blockchain such as BandChain is that it helps offload heavy oracle computations from the requester’s blockchain. Hence, oracle operations don’t need to be duplicated onto a new chain, which enhances integration with DApps for greater scalability.

Pay-per-Request Model

Through BandChain, users requesting data only need to pay the associated fees (depending on the request). BandChain’s pay-per-request model is very economical, especially when you don’t need data for an entire set of assets.

Source: BandChain docs

How Does Band Protocol Work?

Band Protocol’s architecture consists of a thriving ecosystem of a fully-dedicated public blockchain, data providers, a standard dataset aggregator and verifiable random function (VRF).

These components provide a scalable interplay of strategic functionalities to provide DApps with access to real-world, off-chain data. Let’s look at each of these components for a better understanding of how Band Protocol works.

BandChain

At the core of Band’s operations is BandChain, with a design that focuses on speed, scalability, cross-chain compatibility and flexibility. BandChain curates off-chain data using a system consisting of data sources, network participants, and WebAssembly–powered oracle scripts.

A data source on BandChain describes the procedure of retrieving raw data and the fees applicable to the data query. Anyone can register as a data source on BandChain.

However, upon requesting data on BandChain, users don’t interact with data sources; instead, oracle scripts cater to their requests. BandChain’s oracle scripts are quite similar to smart contracts in that they’re Turing-complete, and programmable in multiple languages.

Oracle scripts are encoded to outline the data sources necessary to respond to a data request. Once the request is fulfilled, the scripts aggregate data reports from validators and provide a final result.

BandChain’s Network Participants

To function, BandChain relies on three groups of participants:

• Validators — The main role of validators is to participate in BandChain’s consensus mechanism of proposing and committing new blocks. They do so by staking BAND tokens to secure a validator node. Only the top 100 validator candidates with the most BAND tokens staked can become a validator. These validators operate similarly to other DPoS projects in the Cosmos ecosystem.
• Delegators — Unlike validators, delegators don’t need to operate a node. Instead, they help secure the network by delegating their BAND tokens to validators and receiving staking rewards.
• Data Providers — The Laozi Mainnet upgrade on Band Protocol has introduced on-chain payments. Consequently, data providers can receive revenue collected from data queries. Such incentivization helps improve the quality of oracle data provision on the network.

Oracle Data Request Flow

Before we proceed to the other components of Band Protocol, let’s look at how an oracle data request flows through BandChain’s network.

Step 1: Before a data request is addressed, data sources and oracle scripts have to be published.

Step 2: Once published, a user broadcasts their data request, which initializes the oracle script’s execution process.

Step 3: On initialization, the scripts fetch and emit raw data, which is inspected and confirmed by randomly selected validators.

Step 4: Once the raw data is received, the oracle scripts aggregate the validator’s reports and request storage of the final result.

Source: BandChain docs

Band Standard Dataset

Band Standard Dataset is an exhaustive reference dataset on Band Protocol that consists of frequently updated and highly customizable price feeds. This product provides developers with comprehensive and extensible price feeds to integrate into their DApps.

With real-time price information of 90 cryptocurrencies and 14 forex rates and commodities, Standard Dataset is heavily optimized and low-cost, with end-to-end flexibility.

Source: Band Protocol

Band VRF

The Band Verifiable Random Function (Band VRF) is a cryptographic operation powered by Band Protocol that allows verifiable and tamperproof randomness in DApps. As the newest feature on Band, VRF is packed with security properties, such as unpredictability, uniqueness and collision-resistance to ensure valid random outputs.

This product is particularly suitable for EVM-compatible DApps that depend on pseudorandom values, such as lottery and NFT minting.

Source: Medium

Data Providers

Band Protocol has an on-chain revenue feature that lets data providers supply data and earn in real time. In this way, Band Protocol helps ensure DApps have ready access to a wide range of data to develop DeFi products.

To start earning, a data provider needs to set up a wallet (which takes less than two days) and deploy a data source. Data providers have 100% control over their revenue, since the wallet is decentralized.

Source: Band Protocol

Band Protocol vs. Chainlink

When you mention blockchain oracles, the two names that always top the list are Chainlink and Band Protocol. The two are playing a crucial role in providing oracle data solutions to power the DeFi economy.

Chainlink was launched in 2017 and commands the largest market share in the data oracle niche, with its total value secured (TVS) having surpassed $75 billion by the end of 2021. Band Protocol was launched two years later, and has been right on the heels of Chainlink.

That said, there’s always a debate on which is better suited to build DApps.

Well, there’s no clear-cut answer to that question — since each of them possesses different features and approaches data oracle provision in diverse ways.

A key difference between the two oracles is that Chainlink is built on the Ethereum blockchain, while Band migrated to the Cosmos blockchain. When sourcing data from Chainlink, the fee conversion is done on Ethereum, which — at least pre-Merge — has had a perennial problem with high gas fees and low throughput.

However, Cosmos-powered Band Protocol enjoys almost instant transaction confirmations at a much lower cost.

Another major difference lies in the network design. While Band Protocol has developed BandChain to act as its public blockchain, Chainlink doesn’t have its own blockchain. Oracle nodes have the extra task of acting as block validators on the network, which may lead to increased operating costs. Oracle nodes on Chainlink are quite lightweight since their only focus is data delivery.

What Are Band Tokens (BAND)?

BAND is the sole native token powering BandChain. As of the time of writing (Oct. 27, 2022), it is priced at $1.14 and has a total supply of 100 million tokens with a circulating supply of 41,591,943.

BAND has three use cases:

1. Secure the Band network through validators, who bond their tokens to operate a validation node. Validators then set a fee for their services and are rewarded using BAND tokens once they process transactions. If a validator engages in on-chain misbehavior, a portion of their staked BAND tokens will be slashed. Activities that may lead to slashing include excessive downtime, double signing and unresponsiveness.
2. A delegator on BandChain can also delegate their BAND tokens to a validator to share in the rewards (and risks). Staking BAND tokens to become a delegator requires active monitoring to ensure validators behave appropriately.
3. Staking BAND tokens also allow delegators and validators to participate in network governance. One’s voting power is proportional to their BAND bonded stake.

It’s worth mentioning that the BAND token uses an inflationary model to encourage network participation by holders through staking. The inflation parameters are similar to those of Cosmos, where the inflation rate is between 7% and 20%, with a target of having 66% of BOND tokens staked.

Band Protocol Price Prediction

Band Protocol is making a mark in the data oracle niche, which is a critical component of the DeFi ecosystem. Demand for data solutions by smart contract platforms and DApps is growing as more projects enter the space. Band Protocol’s vibrant ecosystem of a blockchain-focused solution to data oracles with monetized data provision is strategic and impactful.

BAND tokens were launched in September 2019 through an initial coin offering (ICO) at $0.63. However, BAND’s price didn’t have much traction, and traded in the range of $0.20–$0.50 for most of 2019 and early 2020.

In a buildup to the release of Phase 0 of its Mainnet, BAND’s price began to pump in May 2020, crossing the $1 level. The price increase continued into June, when the Mainnet was released. BAND experienced phenomenal growth after the launch, with major price spikes in July and August 2020 seeing the token touch $14.

However, BAND's price gradually fell for the rest of that year — yet performed incredibly well at the beginning of 2021, when it hit its highest price of $22.83 in April of that year. In mid-2021, Band Protocol's price plunged to a low of around $5. It continued to decline in the months that followed, stagnating at around $1.

Source: CoinGecko

Market price experts hold a fairly bullish outlook for the BAND token. Analysts at CoinCodex believe that BAND could range between $3.60 to $18.73 in 2025. Price Prediction forecasts a similar minimum price of $3.45 by 2025, which could hit $21.46 in 2030.

DigitalCoinPrice’s BAND price prediction is somewhat less bullish in comparison to the two forecasts above. It anticipates BAND will hit $2.55 in 2025, with its growth rate slowing down to reach $5.59 in 2030.

Where to Buy Band Protocol (BAND)

You can buy BAND tokens from various top cryptocurrency exchanges, such as Bybit, which offers USDT perpetual trading pairs for the token. You simply need to create an account on Bybit, head to the Derivatives page, and start trading BAND.

Closing Thoughts

Data oracles are a critical link in the growth of DeFi. By providing a medium through which smart contracts and the decentralized economy can access off-chain data, the Band Protocol network helps in the scalability and growth of the sector.

As Band Protocol continues to roll out its Mainnet in phases and to scale, it’s expected to grow into a truly decentralized and reliable data oracles provider, and may even beat out its strongest competitor — Chainlink — due to its low cost and high speed.