Band Protocol is a blockchain project powering the exchange of information between decentralized networks and feeds smart contracts with real-world data.
Originally, blockchain systems did not interact with the traditional world, not even between themselves. Despite the fact that they are meant to impact the conventional finance sector profoundly, a failure to communicate between themselves and even with the outside world meant slower adoption.
Ethereum came with smart contracts to help put traditional concepts such as insurance on the blockchain. But then, the contracts needed data from insurance companies. The need for cross-chain interaction and the power to interact with real-world data was born. This is where the Band Protocol project aims to make a difference.
The Band ecosystem is a project co-founded by Soravis Srinawakoon (CEO), Sorawit Suriyakarn (CTO), and Paul Nattapatsiri (CPO). Soravis has a rich background in computer science and has appeared in the Forbes’ 30 under 30 list.
Sorawit is an MIT-educated tech guy who has been involved with Quora and Dropbox. On the other hand, Paul is involved with Tripadvisor and Turmapp. He has also created cryptocurrency games that have gained over 800,000 users since 2013.
Band Protocol is backed by leading global investors such as Binance, SeaX Ventures, Woodstock, Dunamu & Partners, Sequoia Capital, and Alphain Ventures.
What is Band Protocol?
Band Protocol is a blockchain project powering the exchange of information between decentralized networks and feeds smart contracts with real-world data. The system is built around speed, scalability, inter-chain compatibility, and data flexibility.
The protocol features a flexible oracle, allowing smart contract developers to request for data, including but not limited to, random numbers, sports, and weather-related information. Through WebAssemby (WASM), developers can create personalized contracts that are fed with data from real-world events through APIs.
Apart from fetching data from multiple sources, the Band protocol also aggregates them. Aggregation ensures that the data format is compatible with a wide range of decentralized platforms.
Although there are other cross-chain communication solutions, they have many limitations. For example, they have largely centralized designs, presenting a security risk, and defeating the entire idea behind blockchain, which is decentralization and trustlessness.
Additionally, data coming from a central point is prone to manipulation. When fed into smart contracts, flawed data leads to flawed decisions.
Apart from centralization, the current breed of inter-chain oracles suffers from network congestion. Mostly, the congestion is brought by hosting the application and the solution on the same blockchain platform. As such, blockchain congestion from unprocessed transactions negatively affects the performance of the oracles.
The Band Solution
For Band Protocol, solving the above problems can only be done by sitting between decentralized applications (Dapps) or smart contracts and the data sources. Basically, Band takes care of data requests from blockchain-based apps, requests data from connected external data sources, and relays back reliable data to the requester.
Band’s 4-pronged solution:
Band works on a pay-per-request basis allowing anyone to request data and only pay for what they have used. Some oracle projects’ charges are built around entire packages, making them costly for those making only few requests.
The platform’s oracle scripts and data source ensures that requesters have the freedom to request any amount of data. Also, the system is flexible enough to handle a wide range of data computations and mutations.
Band’s data sources are responsible for providing BandChain’s validators with data. Oracle scripts define how requester access that data. The scripts also specify the number of data sources that a validator should fetch data from and the method to consolidate data from multiple sources.
Band Protocol is built on BandChain, which has a global pool of validators increasing decentralization. Two layers power Band oracles. The first one is made up of decentralized validators while the second comes from the fact that validators access data from different independent sources.
Since BandChain is purposely built to provide reliable data to Dapps and smart contracts, it has higher scalability capabilities. This leads to higher speeds when compared with leading blockchain platforms such as Ethereum and Bitcoin.
For example, Band has an average transaction speed of 3 seconds, while Ethereum and Bitcoin have an average block time of 10 minutes. Note that high transaction speeds translate to high data request speeds.
Interestingly, to enhance scalability, Band can transfer the data request from a requester’s chain to BandChain to expedite its fulfillment.
The band ecosystem has a native token called BAND. BAND has four key uses;
- The token is a key consideration for Band validators.
- It can be delegated to validators to earn rewards.
- It’s required to pay for transaction fees.
- Also, BAND is required to take part in governance issues.
The BAND token is developed on an inflationary model. It aims to reward network users and encourage them to stake instead of trading their holdings.
Inflation parameters on the blockchain are similar to those used by the Cosmos network. A one-year inflation rate ranges from 7 percent to 20 percent.
With the Band token economics’ largely inspired by Cosmos. The chain’s validators earn BAND for processing transactions and committing new blocks on the network. However, not all block rewards go the incentivizing validators. Two percent is sent to the community fund pool.
Funds in the community pool are used for the platform’s development purposes, with development options being raised and voted for by the Band community.
The Band Protocol monitors the behaviors of validators in what may lead to a slashed delegated stake. Some behaviors that may lead to a validator’s stake being slashed include unresponsiveness, double signing, and extensive downtimes.
Therefore, delegating coins to a validator requires the delegators to conduct due diligence since a misbehaving validator presents more risks to staked coins. Furthermore, delegators must participate in governance issues since not voting gives more voting power to validators through delegated tokens.
With the growth of smart contracts and Dapps, Band Protocol forms a crucial part of the ecosystem by providing reliable real-world data. Also, its enhanced transaction speed allows interaction with upcoming blockchain-based systems such as those driving decentralized finance (DeFi).
By monitoring and punishing misbehaving validators, Band ensures that the platform is active and safe. In addition, an inflationary token model ensures that the network’s rewards system is sustainable in the long-term.