What is Band Protocol (BAND)?

The Band Protocol project aims to create a data aggregation and connection system so that developers can access it through an API (Application Programming Interface), with which they can access a powerful blockchain oracle and obtain the information they need. they need for their applications.

Ehe Band Protocol project encompasses a especially useful function for DEX applications, where asset price information is obtained thanks to oracles such as Band Protocol. Precisely for this reason, the logic of the DEX is able to allow the operations of its users in real time.

Of course, this also means that Band Protocol has to cope with a huge demand for data and operations on its network, for which it has been implemented in the Cosmos network. Thus, Band Protocol obtains high operating speed, low commissions and, most importantly, the ability to easily integrate different networks.

However How does Band Protocol actually work? What makes it so useful? We will see that next ...

How does Band Protocol work?

Band Protocol is a development that seeks to solve the problem of smart contract applications that lack access to real-world data. Simply put, Band Protocol is a blockchain oracle, one that takes data from the real world and turns it into digital data that can be integrated into decentralized applications.

The protocol was initially launched on Ethereum in 2019, however, the limitations of Ethereum and the arrival of Cosmos, led the development team to migrate its infrastructure to that network. This in order to offer better operating conditions to the protocol and, at the same time, allow the protocol to be integrated with other blockchains. The launch in Cosmos (and its BandChain) was known as Band Protocol v2.0, which allowed the protocol to grow and position itself as one of the most widely used blockchain oracles, rivaling Chainlink.

Band Protocol operation

Band Protocol works thanks to the capabilities offered by BandChain, a high-performance public blockchain that allows anyone to make a request for APIs and services available on the traditional web.

BandChain, the Band Protocol chain

BandChain is a blockchain that is built using the Cosmos SDK and is part of its long ecosystem of substrings. Being based on Cosmos technology, BandChain is capable of using the Tendermint consensus protocol, which guarantees high execution speed and scalability, something necessary if the objective of Band Protocol is taken into account.

Now, BandChain works thanks to two actors: the validators who are in charge of verifying the operations and generating the network blocks, and the delegators, which perform staking in favor of third parties whom they represent in order to accumulate voting power and be elected in the validation process in exchange for obtaining rewards.

These rewards that each validator receives are proportional to the number of tokens in staking, while delegates receive a proportion proportional to their participation.

Data Sources

Now, BandChain is a structure whose function is to gather and organize data in a decentralized way. That information comes from different spaces, be it other blockchains or the real world. In Band Protocol they are known as "Data Source" or Data Origins, and they are in charge of taking the data from different sources and taking it to the BandChain, so whoever wants to access this data through the BandChain can do so through the payment of a small commission.

In BandChain, anyone can register a data source in the system. This is done by sending by the registrant a message in which data such as:

1. the sender who wants to create the data source
2. the owner of the data source, if specified
3. the name of the data source
4. the fee per query to be paid by whoever wants to use that data source
5. the executable to be run by validators upon receiving a data request for this data source

In this way, network transactions are used to save sent data and are stored in blocks.

Access to data through oracles

With the data recorded on the chain, it is time for the oracles to begin their work. The oracles in Band Protocol are nothing more than powerful scripts that run on the BandChain and they are capable of responding to requests for information made to them.

Thus oracles are able to:

1. Respond to requests for information made by users.
2. Analyze data within the network and generate reports about them.
3. The oracle scripts in Band Protocol They are Turing-complete and can be programmed in multiple languages, and they are compiled in OWasm. This configuration and complexity of Turing makes oracle scripts very similar to smart contracts.

To create an oracle script, the creator must issue a MsgCreateOracleScript to BandChain, with the following structure:

1. the sender you want to create the oracle script
2. the owner of the oracle script, if specified
3. the name of the oracle script
4. the compiled OWasm binary attached to this oracle script
5. the schematic detailing the inputs and outputs of this oracle script, as well as the corresponding types
6. the URL of the source code of this oracle script
7. As with data sources, the sender who wants to create the oracle script does not have to be the same as the owner of the oracle script specified in the message.

As you can see, these scripts carry out an "information analysis, classification and search" task whose execution occurs in two phases:

In the first phase, the script describes the data sources necessary for its execution. It then sends a request to the string's validators to retrieve the result from the required data sources. The content of this consists of the execution steps of the data sources and the associated parameters.

The second phase aggregates all the data reports returned by the validators, and each report contains the values ​​that the validator has received from the required data sources. The script then proceeds to combine those values ​​into a single final result.

Note that the details of the adding process are entirely dependent on the design of the oracle script. BandChain does not impose any rules when it comes to the data aggregation method used, and leaves that design decision entirely up to the creator of the script or subsequent editors.

What does Band Protocol offer us?

All of the above allows Band Protocol to offer us the following:

1. Speed ​​and scalability. Since the use of BandChain and its Tendermint protocol allows you to deal with large number of requests in a few seconds.
2. String compatibility. Thanks to the use of Cosmos, Band Protocol is able to work agnostically with other blockchains.
3. Data flexibility. Band Protocol supports different data aggregation and recovery methods.

Thus, Band Protocol offers us a system capable of selecting both on-chain and off-chain data, and being able to integrate said data into decentralized applications.

Token BAND and its characteristics

BAND is the platform's native token and the only one found on it today. As is generally the case in blockchains, network participants receive their rewards with BAND.

BAND is a utility token which can be used to:

1. Become a validator.
2. Delegate your holdings to another validator to earn a portion of the collected fees and inflationary rewards.
3. Participate in the governance of the network.
4. Validators can use the tokens to set a fee for processing transactions.

BAND held an ICO that ended on September 17, 2019 in which 100.000.000 tokens were distributed at a price of 0,473 USD with which 5.850.000 ETH were raised. The accepted token during the ICO was BNB.

Inflationary model

BandChain applies an inflationary model to the BAND token to encourage participation in the network by token holders. The desired outcome of this model is that token holders choose to stake their coins on the network, rather than just focusing on trading or doing nothing with them. The specific inflation parameters currently reflect those of the Cosmos network. That is, the annual inflation rate ranges between 7% and 20%, and is adjusted so that the target reaches 66% of the total supply of deposited BAND tokens.

To illustrate how inflation encourages staking, let's imagine that we have a participant in the network with a certain amount of participation. With inflation, if you decide not to use your coins to participate in network activities, you will see that the percentage of your participation with respect to the total supply decreases over time. However, if you decide to contribute your coins you will receive a proportion of coins proportional to inflation, which means that your total percentage of token holding will remain relatively unchanged.

Conclusions

Band Protocol has become one of the largest blockchain oracles protocols for two good reasons:

• It is fast and inexpensive.

1. It is powerful and compatible with multiple chains.

Consequently, the community that makes use of its capabilities is huge and this has been reflected in the value of its native token, whose ROI has exceeded 900%. But beyond the market results, Band Protocol stands out for its enormous technical capacity. Your oracle scripts are extremely powerful, with an infinite capacity for data analysis and classification, which makes it very valuable for blockchain data mining.

In addition, BandChain and its Tendermint protocol are one more example of the enormous potential of Cosmos and how the blockchain ecosystem can change forever thanks to the integration between its different parts.

Links of interest