Band Protocol

What is Band Protocol (BAND)?

Band Protocol is a cross-chain data oracle platform that aggregates and connects real-world data and APIs to smart contracts.

Blockchains are revolutionary in providing immutable storage and deterministic value computation but can’t access trusted real-world information outside of their networks. Band Protocol enhances blockchain capabilities by providing access to reliable real-world data minus any central authority or points of failure.

Band Protocol’s flexible oracle design allows developers to use any real-world event data, whether that’s the weather, random numbers, or even sporting events. For example, they can create custom oracles using WebAssembly to connect smart contracts with traditional web APIs within minutes.

How Does Band Protocol Work?

Band Protocol is powered by BandChain, a Cosmos SDK-based blockchain compatible with many, if not most, smart contract and blockchain development frameworks. The project was previously deployed on the Ethereum blockchain, but protocol upgrade 2.0 came with the release of its own dedicated blockchain.

BandChain can modularize and offload more resource-intensive tasks, such as fetching data from external sources and aggregating them from the smart contract platforms onto itself. This prevents task congestion and elevated gas fees on the destination network, and the same data points can be packaged, used, and verified efficiently across multiple chains.

The project saw adoption from applications in lending, money markets, gambling, tokenization, and on-chain and off-chain insurance following the BandChain’s GuanYu mainnet launch in October 2020.

The Laozi upgrade expands the scope of what is possible in several ways. It includes the option for data providers to receive payment directly on-chain from developers using their services on BandChain. It also allows for cross-chain oracle requests through Cosmos’ Inter-Blockchain Communication (IBC) standard.

Operating as a middle layer between smart contract platforms and dApps and data providers, the BandChain Oracle handles data requests, queries the data from providers, and reports results back to the dApp.

It is decentralized through the introduction of maximum redundancy on two separate layers in the infrastructure design. These are “BandChain validators,” who act on the consensus layer and the data source level.

BandChain’s validators number over 100 and are globally distributed. Their performance and actions can be easily monitored and verified by anyone since it’s public and on-chain. When a data request is made, these validators fetch the results from multiple data sources, including top centralized exchange (CEX) platforms.

What makes Band Protocol Unique?

Band Protocol and BandChain are extremely powerful, allowing users maximum customization and flexibility regarding data feeds. Data sources are the most fundamental unit in the oracle system, and users can freely select where data comes from.

The BandChain is also designed explicitly for oracle data requests and computation. It’s a scalable blockchain with an average block time of just three seconds, so data request transactions are received and resolved quickly.

Given that it’s a purpose-built chain that is interoperable with so many others, heavy oracle computations from requesters’ chains can be offloaded from the requester chain. They can be moved to BandChain, specialized in handling those exact types of computations.

This means that oracle core logic and operations don’t need to be duplicated onto a new chain or dApp for each integration, making things much more streamlined and scalable.

How is the Band Protocol Network Secured?

As mentioned, BandChain is the Band Protocol’s own blockchain and has over 100 globally distributed validators. It was developed using the Cosmos SDK, which means it uses a Tendermint BFT (Byzantine Fault Tolerant) proof-of-stake consensus model.

BandChain’s validators have to stake BAND tokens to the protocol, ensuring that they have monetary incentives to properly and correctly report the data or risk losing the capital they’ve staked to slashing along with their reputation.

What is the Use of BAND?

BAND is the native and sole token on Band Protocol’s BandChain. The chain’s validators are rewarded with BAND tokens as an incentive for producing new blocks and submitting responses to data requests.

These validators bond, or stake, BAND tokens in order to be eligible for block production. Ordinary BAND holders can then delegate tokens to different validators to earn a portion of the collected fees and inflationary rewards.

How Much BAND is In Circulation?

As hinted at, the BAND token has an inflationary model. This incentivizes network participation by token holders, making it more desirable to stake BAND on the network and earn part of the inflation rather than hold passively or trade the token.

The protocol targets to stake 66% of the total BAND supply, and the inflation rate changes depending on whether this target is met. When far below the target, inflation can be as high as 20%, with the opposite bound being 7%.

Band Protocol also has a system of community governance in place, where 2% of the total block rewards are directed to the community fund pool. These funds can then be distributed in accordance with the governance decisions made by BAND holders, promoting the long-term sustainability of the ecosystem.

How Do You Buy BAND?

You can buy BAND tokens on several top-tier cryptocurrency exchanges. It’s also possible to buy BAND tokens on DEX platforms like Uniswap, but these might be ERC-20 tokens and not BandChain native tokens.

One BAND is still equal to one BAND irrespective of which chain it’s on, but you do need to be careful when transferring or withdrawing tokens since the blockchain used and wallet address need to match up.

How Do You Store BAND?

Since BAND as a cryptocurrency predates BandChain, it’s possible to acquire both ERC-20 BAND tokens and BandChain-native tokens. For this reason, it’s important to ensure which sort of BAND token you’re trying to buy and store.

Is BAND a Good Investment?

Band Protocol supports 20 major blockchains, has secured a peak total value of almost $3 billion, and had almost 15 million cumulative data requests on the Laozi mainnet at the end of 2022.

These figures offer a glimpse at how compelling a solution Band actually offers, but the team behind it isn’t done. Innovation is always around the corner, and in late 2022 Band Protocol announced the launch of its own VRF.

Band Protocol brings external data to blockchains, a function that seems simple but is, in reality, paramount for dApp developers. It not only achieves this effectively with BandChain but crucially does so with the vision of interoperability to serve not only the one but the many.