What is Band Protocol (BAND)? How Does Band Protocol Work?

Smart contracts are playing a vital role in verifying transactions in the blockchain space. But these contracts have some limitations as they can’t collect real-time data and price feeds from off-chain resources. They often need to use third-services to collect the data. However, oracles have proved to be a better alternative.

Oracles like Band Protocol (BAND) and Chainlink can collect real-time data from external sources without causing any risk to the network.

How Oracles Solve the Problem?

Blockchain networks are bound to maintain a closed data system to provide a secure and efficient transaction platform to the users. Thus, these networks ensure privacy and anonymity. But these networks can’t collect external data or communicate with other blockchains.

The introduction of smart contracts has opened tons of opportunities like Defi Products and decentralized applications (DApps). But when it comes to collecting real-time data, the smart contracts need to rely on third-party solutions. It ultimately leads to problems like network congestion, centralization, and high operation costs.

Thus, blockchain networks can’t maintain a decentralized and trustless environment for users. The oracles establish a middle layer between the blockchain network and the external sources of information. And the security threats are handled on the middle layer before they could enter the main network.

What is Band Protocol?

Band Protocol is an Oracle platform that connects smart contracts and APIs to real-world data. The decentralized applications and exchange of on-chain and off-chain data sources using this bridge. Band Protocol verifies data cryptographically and then packages it into the relevant format.

Band Protocol is leading the decentralized oracles industry with its verifiable random function, monetized data provision, and real-time price information.

Band Protocol (BAND) – Brief History

Band Protocol was co-founded by Soravis Srinawakoon (CEO), Paul Nattapatsiri (CPO), and Sorawit Suriyakarn (CTO) in 2017. The team raised around $3 million from venture capital firms in the early months of 2019. And later that year, the team raised another $5.85 million in funding through an initial exchange offering.

Around 12.37% of the total 100 million BAND tokens were sold during the token sale. The team sold around 27% of the total supply to early investors through several rounds of funding. Around 22% of the total supply is reserved for the development team and 25% is reserved for the Band Protocol ecosystem.

The project was initially built on Ethereum and was later migrated to Cosmos in 2020 to solve the high gas fees problem. The Cosmos Inter-Blockchain Communication Protocol unleashed cross-chain functionalities for Dapps and Defi products.

Band Protocol vs. Chainlink

Chainlink is one of the early Oracle networks introduced in the blockchain industry. Band Protocol has appeared as a strong competitor for Chainlink. Chainlink currently has the largest market share in this category. But Band Protocol is swiftly growing its reputation.

The main difference between both platforms is that Band Protocol uses Cosmos while Chainlink uses Ethereum. So, Chainlink users need to pay higher fees when requesting information from the platform. On the contrary, Band Protocol provides fast transaction speed with low gas fees.

Another major difference is that Band Protocol offers reduced operation costs because its BandChain acts as the public blockchain. However, Chainlink’s oracles are only designed to deliver data. Therefore, they are much lightweight compared to Band Protocol.

Understanding the Features of BandChain

BandChain is a bridge between smart contracts and data sources. It quickly finalizes transactions with the help of the Tendermint BFT consensus protocol. BandChain collects data from the respective providers based on the requests submitted by DApps.

Decentralization – The network has established a pool of validators to handle data oracle. The platform incentivizes validators through its delegated proof of stake consensus mechanism. The general public can easily access the data of these transactions.

Scalability – BandChain quickly receives and processes data requests. The average block validation time on this platform is around 3 seconds. The oracles can be easily integrated into DApps as their operations don’t need to be duplicated.

Data Flexibility – The users can curate their desired data feed using BandChain because its scripts are customizable in different programming languages. Thus, validators can independently choose the data sources.

Pay-per-Request Model – The standard oracles provide data for an entire set of assets when a user submits a request. But BandChain only charges for the particular type of data the user has requested.

How Does Band Protocol Work?

Band Protocol publicly checks and validates all the transactions using its native blockchain. Thus, it provides accurate and reliable data to its users. Band Network has 100 validators who regularly verify the authenticity of the transactions and add them to the network after finality.

The validators need to hold a certain amount of BAND tokens to become a part of the process. They can either purchase the tokens themselves or they can request other users to delegate their tokens.

The network chooses the top 100 BAND token holders for the pool of validators. The validators need to stay online all the time. Moreover, they must verify the accuracy of each transaction. The network can confiscate some of the BAND tokens of a validator if he doesn’t comply with the rules.

BAND Tokenomics

BAND is the native token of Band Protocol that users need to pay gas fees when requesting information from external sources. The token holders can also delegate their tokens to validators to earn passive income. With a circulating supply of 125.4 million tokens, BAND has a market cap of $181.8 million. It ranks among the 200 best cryptocurrencies in terms of market cap.

Conclusion

Band Protocol is a decentralized Oracle platform that connects smart contracts and APIs to real-world data. It provides fast transaction speed, low gas fees, and customizable scripts in different programming languages. BandChain acts as a public blockchain that incentivizes validators through its delegated proof of stake consensus mechanism.

If you need more information about how Band Protocol works, feel free to get in touch with us. We also invite you to subscribe to our weekly newsletter if you need regular updates about Bitcoin and the crypto market.