Band Protocol is a cross chain data oracle that brings its services to the vast world of decentralized applications (DApps). As more DApps are built on more blockchains, many require reliable data sources to have real use.
How does Band Protocol source reliable data to the blockchain? We answer that question, and others, here.
In this guide:
- History of Band Protocol
- What is Band Protocol?
- How does Band Protocol work?
- Band Protocol (BAND) vs. Chainlink (LINK)
- Roadmap and development history
- BAND tokenomics
- Price and price predictions
- Should you buy BAND?
- How to buy BAND token?
- How to stake Band Protocol token
- Is Band Protocol the future of decentralized oracles?
- Frequently asked questions:
History of Band Protocol
Band Protocol was founded in 2017 by MIT graduates Soravis Srinawakoon, Paul Nattapatsiri, and Sorawit Suriyakarn. Srinawakoon got involved with cryptocurrency when he learned that MIT had “airdropped” $100 worth of bitcoin to all undergraduates who took part in a survey. At that time, students received 0.3 BTC.
Srinawakoon and his friends developed a cryptocurrency gambling website, which doubled as a bitcoin faucet. It rewarded users with bitcoins for winning casino-style games. Srinawakoon sold the website and used the funds to develop Band Protocol.
He noticed that large communities tend to have low-quality interactions due to the lack of accountability and misinformation. That led to the creation of Band Protocol, which was initially designed to provide accurate and reliable information to online blockchain communities. Over time, the protocol shifted its focus, as the team realized that all these emerging technologies can’t function without real-world data. Many protocols would be limiting their use if they exist only in isolation from other ecosystems.
Band Protocol was initially released on the Ethereum blockchain, in 2017. The mainnet was launched on Sep. 30, 2019. However, in 2020, Band Protocol 2.0 was built on its own blockchain, BandChain, using the Cosmos SDK.
The Band protocol aims to become a decentralized oracle for all blockchain applications, and it’s designed to provide great transaction speed, scalability, cross-chain compatibility and data flexibility. The protocol’s focus is to become an institutional data provider and oracle integrator. Band Protocol experienced rapid growth in 2020 after it switched to Band Protocol 2.0.
What is Band Protocol?
Band Protocol combines real-world data with APIs to create smart contracts.
The protocol is built upon BandChain, a Cosmos SDK-based blockchain, that can be used with all smart contract and blockchain development platforms. Band Protocol used a delegated proof-of-stake (dPoS) consensus mechanism to ensure data integrity.
The network is designed for offloading heavy and resource-intensive tasks, such as retrieving data from external sources. This prevents network congestion or high transaction fees on the final networks. Additionally, the same data points can also be packaged and used across multiple blockchains.
The flexible design of the API allows developers to query a wide range of data types, including:
- on-chain data (e.g. token amounts, transaction data, etc.)
- real-world events (e.g. weather, flight status, sports scores, etc.)
- any data available via the internet (e.g. stocks or cryptocurrency price)
Since the launch of GuanYu mainnet, there has been an exponential rise of the protocol. This includes applications offering both on-chain and real-world data. Some of the applications using the Band Protocol offer lending and money exchange services, while others operate in the gambling or asset and tokenization space.
The Laozi upgrade (phase 2) focuses on increasing the usability of the protocol. The two main focus points are on-chain payments for data providers from developers and implementing the inter-blockchain communication (IBC) standard. The IBC will allow cross-chain oracle requests.
Considering all these updates, the Band oracle will be able to offer developers a new set of products and services. These include decentralized oracles and verifiable randomness. They will also facilitate cross-chain communication.
How does Band Protocol work?
Band Protocol acts as an intermediary between off-chain internet data sources and blockchains.
It handles data requests from decentralized applications and relays the information using data feeds from other parts of the internet. It does this by using its own blockchain which allows all transactions to be validated and publicly verified.
This, according to the Band Protocol team, helps ensure that the data users provide isn’t altered, falsified, or otherwise compromised.
One important component of the protocol is its validators. They are responsible for verifying that transactions on Band Protocol are correct. Validators also add transactions to the Band Protocol Blockchain.
To become a validator, users must own BAND tokens. The protocol’s native tokens can be bought from cryptocurrency exchanges. Users can also delegate their tokens to validators, and receive a part of the validator’s rewards.
The network selects the top 100 candidates who have the most BAND tokens to become validators. They must adhere to specific rules such as responding to network events, confirming transactions, and must always be available online. When a validator breaks any of those rules, they risk losing a part of their BAND tokens.
Band Protocol (BAND) vs. Chainlink (LINK)
As the world rapidly shifts towards Web 3.0, an increasing number of internet applications will need the services of an oracle that can provide reliable real-world data. Band Protocol is one of the main competitors to Chainlink, the most popular decentralized oracle in the blockchain space.
At their core, both protocols are decentralized blockchain oracle providers that use smart contracts to deliver real-world data. However, one of the most important differences between the Chainlink and Band Protocol is their networks.
Chainlink is built on the Ethereum blockchain, which Band Protocol has now its own blockchain, called BandChain, which was built using the Cosmos SDK. The blockchain used is important, as Cosmos helps Band Protocol to keep its transaction costs low, when compared to Ethereum’s transactions.
Cosmos is often regarded as a fast and interoperable blockchain solution, which means that data from different blockchains can be easily fetched and sourced through smart contracts for your specific application.
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Both projects have growing ecosystems
As of Feb. 2022, the Band Protocol has partnered with over 70 projects, including Terra and Mirror protocol. It also supports big-name exchanges, including Binance, Coinbase and Uniswap.
Chainlink had a maximum supply of 1 billion LINK tokens, and almost half of that amount is already circulating. The project has numerous partnerships, including big names such as Aave, dYdX, Synteticx, PancakeSwap, Google Cloud and PayPal.
While Band Protocol is cheaper to use, Chainlink is still the most popular project and is considered the default protocol by developers. New developers can be influenced by what others are using, which only brings more business for the Chainlink team.
Roadmap and development history
The Band Protocol had 2 ICOs, and 1 IEO. During the first ICO in Aug. 2018, 10 million BAND tokens were sold for $0.30 each. This raised a total amount of $3 million. The second ICO, which was private, took place in May 2019, selling 5 million BAND tokens at $0.40 per BAND. It raised $2 million.
Band Protocol’s IEO raised $5.85 million, and it was its most successful round of funding. The Binance Launchpad saw the sale of just under 12.4 million (12.37% of the total supply) BAND tokens at $0.473 per BAND. Since the original version of the Band Protocol was developed on Ethereum, all BAND tokens that were sold in the ICO or IEO rounds were ERC-20 tokens.
BAND’s total supply is 100 million, though this number is likely to rise in the future.
According to the Band Protocol roadmap, BandChain’s mainnet release is planned in four phases:
- Phase 0 (Wenchang). Launched in Jun. 2020. This phase is now deprecated. During phase 0, Band Protocol validators were able to transfer BAND tokens from the Ethereum blockchain to the new Bandchain and stake them.
- Phase 1 (GuanYu). The Oracle-WASM was released on the mainnet, to support built-in and custom Data Oracle Scripts. Inter-blockchain communication (IBC) was added to communicate between Cosmos and EVM blockchains. Phase 1 was completed on Oct. 15, 2020.
- Phase 2 (Laozi). This is the current stage of the project. It aims to allow API providers to trustlessly sell their data on-chain and earn revenue on-chain. It also focuses on improving compatibility between different blockchains.
- Phase 3 (Confucious). A research phase focused on creating more payment options in the ecosystem, supporting a peer-to-peer authentication gateway and releasing a standard for smart contract interoperability with enterprise software.
BAND tokenomics
BAND is the native coin of BandChain, the blockchain of Band Protocol. The chain incentivises validators to create new blocks and respond to data requests using the BAND token.
BAND tokens have three main use cases within the Bandchain network:
- Tokens can be used to deploy a validator node
- Tokens can be delegated to other validators to earn inflationary rewards and a portion of the collected fees
- To participate in the governance of the chain
BandChain uses an inflationary model for the BAND token. This model aims to encourage token holders to delegate their coins to network validators, instead of focusing solely on trading or doing nothing at all. The inflation parameters are currently identical to those of the Cosmos network. They include a range of 7% to 20% annual inflation and an adjustment to ensure that 66% of the total BAND token supply is staked.
Imagine a network participant who has a certain amount holding. If they decide not to use their coins for the network’s activities they will see a decrease in their holding relative to the total supply. If they choose to stake their coins, they will receive a proportional share of coins to inflation. Their total token holding ratio will therefore remain relatively constant.
According to ICODrops, the BAND token supply distribution stands as follows:
- Seed sale – 10%
- Private sale – 5%
- Launchpad sale – 12.37%
- Ecosystem development – 25.63%
- Team – 20%
- Advisors – 5%
- Foundation – 22%
Price and price predictions
BAND was launched during the cryptocurrency bear market of late 2019. For months, its price remained stable at $0.20 and $0.30. This was less than its ICO price of $0.30.
The BAND token price began to rise slowly in Apr. 2020, and it reached over $15 in Sep. 2020, only a few months after it launched its mainnet. The BAND token increased 50x from its ICO price. The price of BAND token has reacted positively to each new update and listing.
As of Feb. 2022, the price of BAND token stands at around $4.79. According to CoinMarketCap, BAND token reached its all-time high on Apr. 15, 2021, when it hit $23.19. According to WalletInvestor’s BAND token price predictions, the market is bearish. The price of BAND could decrease by the end of the year.
Should you buy BAND?
Band Protocol has serious potential. That’s because most decentralized applications need trustworthy oracles to ensure their need for reliable data sources. According to Srinawakoon, blockchain oracles are as valuable as the blockchain network itself. Band Protocol oracles are able to fulfill data requests that make blockchains usable.
Many will compare Band Protocol to Chainlink, which is already a more established and popular solution for DApps in need of decentralized oracles. Some would argue that Chainlink is limited to Ethereum-based DApps, which is not the best in terms of cost and scalability, at least for now. However, this leaves room for Band Protocol to become the default decentralized oracle for non-Ethereum applications.
How to buy BAND token?
After you’ve done all your research, you might be wondering how to buy BAND tokens. Luckily, you can do that in a few easy steps.
Step 1. Choose a cryptocurrency exchange
Before you can buy BAND tokens, you need to find a crypto exchange that has listed the token. You can find the list of all available markets on CoinMarketCap.
Some of the most popular exchanges to buy BAND tokens are Binance, Coinbase and Crypto.com.
In this example, we will use Binance to buy BAND tokens. You can also use Coinbase, which is often regarded as the most beginner-friendly cryptocurrency exchange. However, note that Coinbase only supports the BAND token running on Ethereum (ERC-20).
Step 2. Create an account
If this is your first time buying cryptocurrency, you will need to create an account on the chosen crypto exchange.
Setting up an account on Binance is easy and only requires a few clicks. Click on Register and enter all the information needed.
Step 3. Verify your account
Before you can purchase cryptocurrency with your credit or debit card, you will need to verify your identity. This is the case with most centralized crypto exchanges that allow direct crypto purchases with fiat.
To get verified, you will have to provide your ID and tax information, as well as proof of your home address.
Step 4. Buy BAND token
After your account gets verified, go to Buy Crypto and select Credit/Debit Card. You can select your fiat currency and the desired crypto. In this case, we will choose USDT since BAND token isn’t available for direct purchase.
After you’ve entered all the details, click on Continue. You will have to activate Fiat Service, which allows the Binance service provide to access your private information.
After your fiat services is activated (it only takes a couple of seconds), you will see all the details of your transaction. You can also input the details of your credit or debit card here, if you haven’t already.
Click on Continue when you’re ready.
Here you will see the exact price per USDT token, the transaction sees and the total amount you’re going to pay. If you’re happy with all the details, click on Confirm before the quote expires and you will finalise the transaction. It should only take a few moments to see the tokens in your account. You will also receive an email confirmation of your purchase.
If you want to see what the market looks like, go to Market (from the top menu) and search for BAND token. Then click on Trade.
You will see the market screen, where you can set market orders to buy BAND token.
When you scroll down, you will see this window, where you can set your buy/sell orders.
Convert to USDT if necessary
However, if you are not used to how to set orders to buy cryptocurrency, the easiest way to buy BAND token is to convert your USDT using the Convert option in Binance. Go to Trade (top menu) and select Convert.
You can choose the crypto to convert in the box. In this example, we will convert USDT to BAND tokens.
After you enter the amount to convert, you have to Confirm the transaction before the quote expires.
After you click on Confirm, you will get this message.
You can click on View Status to see all your conversions.
To see your funds, you can always go to Wallet > Fiat and Spot and you will see all the coins in your Binance account.
Congrats on your purchase! You can keep the tokens in your account, or send them to a different wallet for long-term storage.
How to stake Band Protocol token
BandChain, the blockchain used for running the Band Protocol, uses a delegated proof-of-stake (dPoS) consensus mechanism, which requires users to stake their tokens to ensure the continuity of the blockchain.
So, how do you stake BAND tokens? The easiest way to stake BAND tokens is to use Binance Staking.
There are many other options available, and non-custodial crypto wallets that make it easier for anyone to stake BAND tokens, including Cosmostation and Atomic Wallet.
On Binance, you can only stake BAND tokens under Locked Staking. You can select between 30 and 60 days to stake BAND. Click on Stake Now and enter the amount of BAND tokens you want to stake. The minimum amount is 20 BAND.
After you review all the details, click on Confirm. You will receive a notification from Binance saying that your transaction was successful.
You can see your staking in your Wallet > Earn section.
To collect your interest, you will have to wait for the 30 or 60-day term to end. However, you can redeem your deposit earlier. In that case, you will not receive any interest on your deposit.
And that’s how you can stake BAND tokens on Binance.
Is Band Protocol the future of decentralized oracles?
DeFi’s rapid growth rate means that more decentralized applications will be released in the near future. Many of these require reliable off-chain data sources. While Chainlink is the default oracle for Ethereum-based applications, other DApps based on other blockchains also require decentralized oracles to source their data. In that case, Band Protocol is an excellent contender for the role and looks like more partnerships are on the way.
Frequently asked questions:
What is Band Protocol?
Will Band Protocol (BAND) price go up?
Who uses Band Protocol?
Why is Band Protocol important?
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