What is Band Protocol?
Band Protocol is one of the many oracle solutions available for Web3 apps. Essentially, smart contracts cannot access data by themselves — there is no simple and intuitive query interface for dapps to receive real-world data.
Existing data availability solutions for smart contracts either depend on highly critical central points of failure or are subject to delays. It is not enough for a DeFi protocol or dapp to be decentralized – its data sources must be decentralized too!
Band Protocol was founded in 2017 by Sorawit Suriyakarn, a former software engineer at Google, and Paul Nattapatsiri, a former algorithmic trader at Deutsche Bank.
The idea behind Band Protocol was to solve the problem of trust in dapps that require external data to function properly. While smart contracts on blockchains are immutable and secure, they can only operate on data that exists within the blockchain. This limits the functionality of dapps and makes it difficult to build applications that require real-world data, such as financial data, weather data, or sports scores.
To solve this problem, Band Protocol built a decentralized oracle network that aggregates data from multiple sources, verifies its accuracy, and makes it available on-chain to be used by smart contracts.
Band Protocol verifies the accuracy of the data it receives by using a combination of cryptographic algorithms and economic incentives.
The protocol uses a process called "commit-reveal" to ensure that data providers cannot manipulate the data they submit. This process involves data providers committing to the data they will submit before they know the final result, and then revealing the data after the final result is known. This ensures that data providers have a strong economic incentive to provide accurate data.
Band Protocol has come up with its own network in order to streamline payments for participants and guarantee the accuracy of data. Called BandChain, it is a Cosmos-based blockchain that uses Delegated Proof-of-Stake consensus. In this setup, validators deposit collateral in the form of BAND tokens and are tasked with verifying the real-world data that is sent to various blockchains.
Band Protocol has never been hacked. Their only weak link is BandChain, which attests for the accuracy of the data. Validators on BandChain are chosen randomly, making it difficult for an attacker to predict who will retrieve the data.
How does Band Protocol work?
Band Protocol is a Web 3.0 component layer solution for managing data that resolves the data availability and reliability problem for blockchains. Dapps using Band Protocol consume data via BAND public smart contract data points rather than through oracles that are external to the blockchain the dApp is built on.
AND data feeds are community-curated data sources, providing a framework for dApp users and developers alike to self moderate, curate and manage the data sources such that they can be trusted and reliable for their intended purposes.
The responsibility of providing and curating data is delegated to elected top data providers. These top data providers are governed by the Band Token holders, allowing them to remove underperforming providers to ensure optimal operation. An elected data provider stakes dataset tokens along with other token holders who stake on their behalf, and collects rewards in the form of the fees paid by the dApps that consume the provided data.
BandChain
Band Protocol is build on top of BandChain, a data oracle blockchain built using Tendermint BFT consensus algorithm. It serves as the primary mechanism of ensuring the data is available and reliable. Data requests from Dapps are recorded into BandChain, where they are publicly viewable.
BandChain acts as a middleman layer between smart contracts and various data providers. The blockchain is operated by a set of validators who are responsible for fetching the results. Validators get rewarded for their work with BAND tokens. With millions of daily data requests, the rewards quickly add up.
BandChain allows developers to query any range of data types, including both on-chain data (token balances, transaction data, etc.), real-world events (sports scores, flight status, weather, etc.), and any data that is available through the web or any other mediums (stocks/token prices, random numbers, etc.)
Band Standard Dataset
Band Standard Dataset represents the protocol's flagship product. It aggregates data prices from over 14 institutional-grade data providers and exchanges. Whether you are building a Dapp or using it, having the price updated in real-time is crucial to your decision making. Since there is no central authority to arbiter the truth, prices must be aggregated from different sources.
The primary price data sources are exchanges, followed by data providers such as CryptoCompare, CoinMarketCap and CoinGecko. Their data is mainly outsourced by DeFi protocols. For example, when executing a swap on Alpha Homora, the price of the swap has been aggregated from multiple sources. This way, you can do the swap at the fair market price.
Band Protocol VFR
Randomness is a fundamental function that helps to operate many modern Dapps. For example, online lottery systems rely on randomness to select winners. Similarly, consider validator election in proof of stake blockchains. With such use cases, it is crucial to guarantee that randomness is sampled uniformly and independently of the application’s state, therefore making it hard to predict the outcome.
A Verifiable Random Function (VRF) is a mathematical operation that processes inputted values and generates a random output along with the proof of authenticity of the output generation process. This way, the result can be challenged in the event of a dispute over the fairness of the process.
Proof of authenticity is one of the most important components of VRF, as it demonstrates the random generated number has not been tampered with.
Validators on the BandChain are responsible for generating the random number, as requested by Dapps. The final results are stored on the BandChain as proof of the random number generator process before it's sent to the Dapp.
How to make money on Band Protocol?
The only way to earn on Band Protocol is to become a validator or data provider. The process of joining Band Protocol as a validator is technical, which is why we recommend reading their documentation.
Price Prediction for Band Protocol — Can it hit $1000?
Buying and hodling BAND — the native token of Band Protocol — is one way of potentially making money on BAND.
BAND is the native token of the Band Protocol ecosystem and is used as collateral by validators involved in fulfilling data requests, as well as the main medium of exchange on BandChain — being used to paying for private data. This means the long-term value of BAND is influenced by the number of users.
By looking at its current price, it’s natural to think about the chance of BAND hitting $100 per token. This can happen sooner, or way in the future, and is determined by a couple of ever changing factors.
Let’s examine the potential growth of the BAND token by analyzing its tokenomics. BAND’s current market cap sits comfortably at ${MARKET_CAP}. With {CIRCULATING_SUPPLY} BAND tokens being in circulation today, that means a price of {PRICE} per BAND.
How did we come to that calculation? It’s quite easy, the price of a BAND token is equal to its current market cap divided by the number of tokens in circulation. Dividing ${MARKET_CAP} by {CIRCULATING_SUPPLY} gives us a result of {PRICE} for each BAND coin.
By changing the order in the simple formula above we can use it to calculate other things as well. This helps us a lot because we can deduce the market cap of BAND at different token prices. Then, we can use the result to compare it to the current state of the network and see what would be required for BAND to hit that price.
At a price of $100 per token, that means the current market cap of BAND would equal ${{CIRCULATING_SUPPLY} * 100}. Remember that we arrived at this number by multiplying the amount of circulating tokens by $100.
Now let’s shift our attention to the fully diluted market cap.
Some blockchains may have their tokenomics built in a way that only a small percentage of tokens are circulating at the beginning. This can be misleading because we don’t have the full picture and only take into account the current number of coins released in the market.
The fully diluted market cap represents the total value of a coin if all tokens were in circulation. BAND’s whole supply of tokens is {MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} BAND which means that no more coins above that number will ever be created.
BAND has no maximum supply, which means there’s no cap on the maximum of tokens that can be issued.
These tokens are not created at the discretion of a specific entity. They are created automatically by the network to reward different actors that keep it secure.
How does this impact the price of BAND? Taking into account the current price of a BAND token, that would result in a fully diluted market cap of ${MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY * PRICE}. BAND coins that have been burned are not taken into consideration because they have been permanently removed from circulation.
Whether it seems gigantic or not, the number we came to above only takes into account the current price of a BAND token. Doing the same calculation but with a price of $100 gives us a result of ${{MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} * 100} for the BAND protocol fully diluted market cap.
These are all crucial details to know when calculating if BAND can reach the price of $100 per token. If the diluted market capitalization is way too high, the token has little room left to grow. Blockchains in general have no cap on the value they can reach, whether that number seems possible it’s totally up to you.
The future of BAND depends solely on its growth as a network used by tens and hundreds of millions of users. With an ever growing need for decentralized oracles, BAND has a fair share of capturing a portion of the oracle market. That being said, it is possibile for the price of BAND to hit $100 by 2030.
If you’re looking to add some BAND to your portfolio, the most trusted places to get some are Binance and Coinbase.