What is Band Protocol?
The role of blockchain technology in fields like decentralized finance has proved that it is fueling the internet of the future – Web 3.0. However, to create this ‘internet of value’, decentralized applications require data from outside the blockchain network. So, how to fetch this off-chain data?
Decentralized applications require external price feeds, events, and values provided via traditional web APIs. Band Protocol solves this problem by connecting smart contracts with trusted real-world data.
The validators of data stake band coins on the BandChain network, thus taking full responsibility for the data provided.
Whether you have just learned about Band Protocol or you want an in-depth explanation, this article has you covered. This article will give you a detailed insight into the Band Protocol ecosystem, band price, and band coin economics.
The Input and Output of the Blockchain world
Before we dive into the Band Protocol ecosystem and why it is so useful, let us first understand the basics.
Blockchain and Smart Contracts
Blockchain is a distributed ledger of transactions that are digitally recorded and verified by a consensus of the participants. The immutable and chain-like structure of blockchain makes it impossible to hack. Blockchain is managed by a cluster of participants, no central authorities govern the chain.
Smart contracts are lines of code on a blockchain network that are automatically executed after a condition is met.
Think of a money transfer network. You sent some amount to your friend abroad. The money will reach your friend in some days after a commission is deducted. Let us see how this can be done on a blockchain network.
You would simply create a smart contract on the blockchain network, which would ask you to verify your friend’s identity and transfer the money. As soon as your friend satisfies the condition, the money will be transferred. No intermediaries involved, a simple, secure, and fast process.
The money transfer was possible as you instructed the smart contract to accept a code that you gave to your friend.
What if you want to build a decentralized application that informs the users about stock prices? What if you want your smart contract to tell you the weather report or the NFL scoreboard?
This is where a smart contract fails. It is unable to fetch data from outside the blockchain.
As discussed earlier, blockchain cannot access data outside its network. This is a great limitation for smart contracts and decentralized applications operating on the blockchain network.
Band Protocol bridges this gap between the blockchain network and the real-world data by providing trusted information. Band Protocol enhances smart contract functionality by allowing it to connect to and access any real-world data or API in a trustless manner.
Band Protocol is a cross-chain data oracle platform that pulls data from external sources, aggregates it, and packs it into an easy-to-use format that can be verified across multiple blockchain networks.
The BandChain and Band Coin Economics
BandChain is Band Protocol’s independent blockchain network that is specifically built for curating real-world data. BandChain is built on Cosmos SDK.
The data request from BandChain oracle is made by calling the available oracle scripts. An oracle script is an executable program that (1) encodes raw data requests to the sources and (2) conducts the process of aggregating the result.
Data integrity is at the heart of the Band Protocol’s network. They maintain robust data integrity with their band economics. Band coin is used as a native token on BandChain’s network for their governance.
So how can you contribute and benefit from Band?
The Validators and the Delegators
The validators are the ones who respond to data requests, create new blocks on the chain, and process transactions. BandChain promises token incentives for validators to perform these tasks.
Validators have their skin in the game as they have staked band coins as their deposit. If the data they provide is false or tampered, they will be losing some amount from their deposit as a fine. This band coin economics is the foundation of data integrity on the BandChain network.
On the other hand, delegators stake their band coin holdings on other validators on the BandChain network. While delegators earn a portion of the validator’s rewards, they also share their risks. Delegators also have to pay a commission on the amount earned to their validators.
At the time of writing this article, band coin stands at 10.93 EUR.
BandChain’s Features at a Glance
Speed and Scalability
The response time of a data request in the BandChain is 3-6 seconds. Such quick response with minimal latency enables BandChain to provide a large quantity of data requests to multiple blockchains.
BandChain data is compatible with most of the publicly available blockchains. Data authentication is trustless in nature as it is validated by a number of validators.
BandChain supports different methods of retrieving and aggregating data. It supports both publicly available permissionless blockchains and permissionless blockchains guarded by central parties.
The developer requesting data can also specify the number of validators, which reduces the chances of data failure, however, adds more cost to the request.
BandChain is developer friendly as it allows the integration of price and data feeds into decentralized applications in less than 10 lines of code.
With features like speed, compatibility, developer-friendly, flexibility, and data integrity, Band Protocol will surely emerge as the input and output of the blockchain world.
Bringing Global Economy to the Blockchain World
Amongst the various decentralized applications (DApps) being built on blockchain networks, Decentralized Finance applications(DeFI) stand out.
The premise of these applications is to develop and operate financial DApps on the permissionless blockchain network and peer-to-peer(P2P) protocols.
DeFi applications are used to create stablecoins. These digital coins are backed by fiat currency of the same value in 1:1 ratio, which makes this digital asset stable.
Decentralized Finance applications also provide a peer-to-peer lending platform and prove useful in predicting markets. They are challenging the traditional financial framework by providing transparent, cost-effective, secure, and quick solutions.
With Band Protocol’s built-in price oracle script, the Defi application can easily access crypto, stock, and commodity price data from multiple exchanges.
Band Protocol empowers such Defi, prediction markets, stablecoins, as well as gaming platforms with its robust cross-chain data oracle. Band Protocol and its likes are bringing the global economy to the blockchain network.
In a Nutshell
Blockchain has revolutionized the technology spectrum by providing a transparent, secure, and democratic way of transactions. Smart contracts add to the blockchain feature by enabling an automatically executable script when a condition is met. However, smart contracts can only communicate with the native information on the blockchain.
Band Protocol is a cross-chain data oracle platform that acts as a decentralized bridge, connecting the blockchain to the real-world data. It enhances the smart contract functionality by aggregating and connecting real-world data and APIs to smart contracts.
You can buy band coins and stake them on the Band Protocol network as a validator, and earn token incentives for your work. You can also earn tokens by staking your band coin holdings on other validators of the platform.
Band Protocol enables decentralized finance applications, lending platforms, prediction markets, and gaming platforms to be built on the blockchain network.
To sum up, Band Protocol is the input and output of the blockchain world.