Cryptocurrency projects have evolved greatly from its early days of being purely payments based services or more generally focused on very broad use cases. Most recent years have seen a new trend emerge, one where projects are building protocols that bolster the underlying technology and make it capable of facilitating the application of real-world data for concrete use cases.
One such development is that of oracles - bridges between real world data and smart contracts that fully realize the potential of decentralized applications. This is not a new concept, but only recently have multiple projects come forward with feasible solutions that are driving business applications forward.
There are several notable projects that are working on connecting existing data and systems with the decentralized world. The project in question for this guide is Band Protocol (BAND), which is tackling the interoperability problem by building a decentralized framework for the next stage of the web - Web 3.0.
What is Band Protocol?
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Band Protocol (BAND) tackles two pain points in the market: interoperability and data feeds for decentralized applications (Dapps). Both of these are considered to be obstacles on the road to large scale commercial applications of blockchain technology - which is why there are several projects working on the issue.
Specifically, the project is attempting to improve the speed and scalability of networks, data flexibility alongside interoperability solutions. It aims to do this with a Web 3.0 framework that is blockchain agnostic and fully decentralized, bridging the status quo with a new paradigm for the web, built on trustless principles.
Based on the Cosmos network, the BandChain has two tokens - BAND and dataset tokens - to facilitate its features. The team claims that the network can process thousands of transactions per second, making it a commercially viable solution.
BAND is the native token of the platform which is used as collateral to issue dataset tokens, the latter representing ownership in a particular dataset on the platform. BAND is also used for governance and staking.
A pictorial representation of how the network operates. Source.
Several oracles that connect smart contracts to off-chain data have already been designed, including ones that focus on crypto and stock prices, weather updates, flight information and gas costs, among many others. Developers can link their dapps to any open web APIs through customizable oracle scripts, which is programmable in any language that is compatible with the WebAssembly Standard. There are also tools for API providers to monetize real-world data.
Besides the high performance BandChain that comes with several predefined scripts and customizable ones, Band Protocol offers a few other products in a working state.
One of these is the data governance portal, which gives users a look into the datasets on the platform. This feature allows users to buy dataset tokens, and stake them on providers or use them for governance. Regarding the latter, voters can decide on such things as the cost of data query, dataset configurations, the number of data providers, among other things.
Interaction with datasets is conducted via the data governance portal. It is here where voting, staking and exploration of datasets is possible. Currently, there are 4 datasets present on the testnet portal for users to view: a web request oracle, financial data feeds, sports data feeds and lottery data feeds. All metrics and activity can be viewed, and token holders can suggest changes.
Band Protocol’s data governance portal. Source.
Lastly, there’s Band Wallet, the project’s non-custodial wallet for holding both BAND and dataset tokens.
The History of Band Protocol and the Team
Band Protocol's founders have extensive experience. Source.
Band Protocol was founded by Soravis Srinawakoon, Sorawit Suriyakarn and Paul Nattapatsiri, who respectively serve as the project’s CEO, CTO and CPO. The founders have graduated from some of the prestigious academic institutions and also have extensive experience working in the blockchain and cryptocurrency space.
Founded in 2017, the project has yet to release a roadmap to the public, though it has consistently updated the community on development progress. The team released the whitepaper in Q3 2018, which was then revised with additional information in Q1 2019. This was followed by a private testnet release in Q2 2019 and a security audit in the same quarter. The public testnet was released the following quarter.
The project is currently in the second phase of its development. Source.
The project is currently in its second phase, “Guan Yu”, which will see the release of custom data oracle scripts and a custom scripting language for the latter. Phase 2 and 3, “Laozi” and “Confucious”, will improve compatibility with more blockchains, support more payment options and bring a standard for smart contract interoperability with enterprise software.
Investors
Band Protocol has received investment from several notable VC firms. Source.
Unlike most other projects, Band Protocol has a number of eminent global investors supporting its effort, including Sequoia Capital, Dumamu and Partners, Spartan Group, Woodstock, Seax Ventures, Alphain Ventures and Binance.
The bread and quality of these investors give some sense of the confidence in the solution it is building. Sequoia, the most well known of these investors, through its Indian arm invested $3 million in Band Protocol for its efforts to tackle fake news in February 2019.
Partnerships
Band Protocol has formed several partnerships over the last 3 years - in fact, far too many to list them all in detail here. In terms of prominence, the most important partnerships to highlight are Atomic Wallet, Kyber Network (KNC), Kava, Fantom, bZx and several Cosmos validators.
Of note, however, are its partnerships that see the use of Band Protocol’s oracles services onto various platforms. For example, Kava, a Ripple and Binance backed Defi platform, announced in March 2020 that it would use Band Protocol’s decentralized oracle to support cross-chain usage.
Similarly, bZx has implemented Band Protocol’s oracles (as well as Chainlink oracles) for better price feeds for its margin and lending trading platform. In this case, the solution is aimed at detecting anomalies in data and taking into account account slippage and liquidity to ensure as much security as possible.
BZx can then determine if there is a discrepancy between Band Protocol and Chainlink’s data and revert a transaction if necessary.
Band Protocol’s partnership with Fantom sees its oracles applied for different purposes: its oracles have been integrated into the latter’s mainnet Opera, and will support government and decentralized financial applications such as lending, borrowing, and synthetic assets. This will help developers build reliable and high-quality dapps that work on the most accurate data.
Lastly, in May 2020, the project partnered with open finance protocol company FinNexus in May 2020, with the goal being to provide more accurate data for the latter’s financial products, including options, index funds, insurance products, as well as provide support for more assets.
Conclusion
Band Protocol’s oracles come at an appropriate time for the market, just as smart contracts and decentralized applications are gaining more traction. The technologies that underpin the commercial feasibility of said technologies is now undergoing a renaissance moment and reliable oracles are key elements for wide scale adoption.
Band Protocol’s customizable scripts and varied set of oracles, along with the incentives for developers, give it an edge in a market that is growing rapidly. The following months are expected to see more dapps link to the network, which bodes well for both the platform and the market.
