Hello steemians of the crypto academy, welcome to my blog once again. In regards to the lecture of professor @allbert where we studied blockchain oracles and that of chainlink precisely, we have seen from the lecture the importance of blockchain oracles, and as a student of this class, I will be writing in respect to the homework task given.
The professor talked about Chainlink oracle, In this article, I will be discussing another blockchain oracle called Band Protocol. Read on to see what I've got here.
Introduction To Band Protocol
Band protocol is a decentralized blockchain oracle that is built to collect and connect real-world data and APIs to decentralized apps (DApps). It is a blockchain that was initially created as an ERC-20 project around September 2019 and was later integrated with the Cosmos network in June 2020
It is a blockchain that utilizes Its Bandchain which is an independent delegated proof of work(DPoS) built on top of the Cosmos network as said earlier. It is said that the Band protocol is a rivalry of chainlink because of the ability to compute off-chain data and aggregates.
Here, the validators of this blockchain make use of the native token which is BAND to secure and earn profits based on the network protocol. Let's briefly take a look at the history of band protocol below.
History & Description Of Band Protocol
As we have known that blockchain oracles are a kind of third-party service that tends to draws information from the real world(off-chain) to smart contracts and blockchain because blockchains or smart contracts don't have the ability to access these off-chain pieces of information.
And Band protocol is one of these oracles. It was created 2years ago to stand as one of the blockchain oracles that would be transferring information from real-world(off-chain) to blockchains & smart contracts.
Like I said earlier, it was first built in the Ethereum network and later used the Cosmos SDK to build its own network where it can be transferring information from different blockchains. The Bandchain network is released into four different phases as follows.
Phase 0: This is the foundation of the BAND token that was created in the 6th June 2020 to enable users/validators to stake and transfer the token.
Phase 1: Another phase that came after the launch in the same year, October 15the 2020 to be precise, in this phase, it was to support some data scripts that have the ability to query public and permissionless data
Phase 2: Here, it enables the API provider to manage their data in a way that it will be trustless and also collect some revenue from the on-chain
Phase 3: Here the protocol enables different payment methods where the developers chose the type of payment method they need, this is where the nature of decentralized functionality now comes in as it tends to drive interoperability between decentralized apps and off-chain services.
The project was developed by three men namely Soravis Srinawakoon, Sorawit Suriyakarn, and Paul Nattapatsiri. It started and is currently based in Thailand. Research has it that the native token of band protocol raised over $3 million from venture capital firms, and later in that same year, it raised another $5.5 million for an initial exchange offering (IEO).
Furthermore, the protocol during its token presale had an initial supply of 100 million BAND tokens a 12.37% of which was sold during that time, during this time, it also managed another sale but this time, it was private which led to the raising of another $2 million, this description means over 27% of the BAND token supply was sold during this time, a 25% & 22% was kept as reserved for the protocol ecosystem and team development.
Does it have any token or cryptocurrency associated? Explain.
Unlike every other blockchain oracles, the Band protocol has a native token called BAND. It is the native token of the band protocol, as I have said earlier, it was initially created in the ERC-20 network alone, but now it runs on both ERC-20 & BandChain. Let's explore BAND token on the CMC site.
BAND token from CoinMarketCap statistics is currently trading at $8.25 USD, 0.000173 BTC, & 0.002514 ETH, and with a total trading volume of $44,676,007 USD per 24hours. From the above image, you will see that the coin is up by +6.19% in the last 24 hours. Let's scroll down to see other information about the token.
From the above image, you will get information like the Market capitalization which is $288,837,529, the Fully Diluted Market Capitalization which is $824,916,953, the 24hours trading volume which is $45,876,380, and many circulating supplies which is 35,191,821.00 BAND coins. Let's scroll down again to see more information on the BAND token.
The above image depicts the market chart of BAND token with USDT. On the right-hand side of the image is the price statistics again. As we have seen the information, Let's take a look at the below image to see the exchanges where the BAND token is currently traded.
Take a look at the above image, you will find the different marketplace where BAND tokens is been listed and traded with the current currency pair and the market volume per 24hours. Now, let's see the use case of the BAND token.
Transaction and Access Fees: The BAND token serves as means of payment and transaction fees like query fees, and also to access data for application programming interfaces (APIs)
Staking For Validators: The BAND token also serves as means of staking for validators, they are required to stake their BAND token with a higher stake resulting in a high chance of been chosen for the fulling data request.
Furthermore, holders of the BAND token are eligible to participate in the protocol governance band chain, they have the full right terms of making decisions on the network. They can vote for changes. The token also serves as a means of security to the entire network users.
Functionalities Of Band Protocol
As we have known earlier, BandChain is more like an independent blockchain that tends to complete oracle-related tasks like settlements, data sourcing with Delegated Proof of Work Algorithm. Let's see some of the functionalities below.
Scalability: One important function of Band Protocol is that the chain has 2 blocks, which is why all the transactions will be carried out quickly. Not like other decentralized blockchains that face the issue of fast and reliable transactions.
Speed: Another Functionality of the BandChain protocol where the blockchain makes real-time data easier for payments and queries. Furthermore, smart contracts can within seconds receive a verified response of query on-demand.
Apart from the above functionalities, the data providers have the right to create scripts with the aggregation method, this means BandChain can also connect to application programming interfaces. Furthermore, it has a decentralized nature where all nodes are independent.
Let's See Some Real-life Application Of Band Protocol
The Band Protocol's oracle technology has enhanced some real-life applications in the entire DeFi ecosystem, Let's see some of these applications below.
- Lending & Borrowing:
Let's bring the money market where different DeFi products (smart contracts/DApps) connect lenders and borrowers to give out loans. Here they provide their asset to the liquidity pool of these smart contracts to earn some returns as per interest.
Now, lending and borrowing platforms like Venus & Cream finance have integrated the Band protocol to enable secure the funds of LP. The oracle can bring information like price updates from over 20 assets that are available in the smart contracts to ensure real market rate.
- Financial Insurance:
Another application of Band protocol. We all know that our traditional financial sector suffers from transaction transparency from the market intermediary. Some decentralized financial systems particularly need protocols that can aggregate and supply them with information without the concept of intermediaries.
Polkacover which acts as one of the insurance company has decided to work with the Band protocol to leverage the end-to-end flexibility, and to bring insurance products that are not in the market.
- Market Prediction:
Here comes another real-life application of the Band protocol where some market places make predication regarding a particular asset whether it will go up or down within a given timeframe. An example of such a marketplace is EpicX which has recently incorporated with the Band protocol to enable market settlement for different assets at different timeframes.
The Band protocol has the ability to source information that enables the price settlement of digital assets, It gives a correct market prediction of assets, and at the same time prevents possible disagreement in the financial market speculation.
The aforementioned are just but a few of the applications of the Band protocol. As the ecosystem keeps growing, so the importance keeps increasing. Let's take a look at the Good and Bad of the Band protocol.
Advantages & Disadvantages Of Band Protocol
The band protocol has much importance that it plays in the decentralized finance ecosystem as well as some disadvantages too, let's see them below.
Advantages of band protocol
Interoperability: This is one of the major short comes of some decentralized applications where there is no access to trust data and services over the web 2.0. Here, Band protocol has built a well-decentralized connection between the traditional web and Dapps to ensure a secure exchange of information in a swift manner.
Low Transaction Fees: Another importance of the Band Protocol is the ability to carry out quick transactions with low transactions fees.
The aforementioned are just but of the advantage of the band protocol, there are other advantages like where the protocol participants are given the chance to participate in the governance system by making use of the coin. Furthermore, validators of the chain have the ability to contribute ideas for mining new blocks, and can also decide to join the protocol's DPoS algorithm by voting on the data.
Disadvantages of band protocol
One major disadvantage that I have observed from the band protocol is that it cannot run without the presence of validators which means the delegators of this protocol works with the validators as such causing a kind of dispute between the two parties( Delegators and Validators) because the amount of validation is more beneficial than that of the delegators.
Another considering disadvantage is that to become a validator is not totally free, not like some other blockchain oracles that are free, here about 2% of the block rewards will be distributed back to the community pool.
Band Protocol is not also strong in terms of security from my research, I have noticed that if there is kind congestion in the data requesting, participants will always be afraid of losing their funds, this is because the protocol uses its token as a means of security.
Future developments and new projects
In this heading, I will take you on a walk to the future developments and new projects of this blockchain oracle. Among the future developments of band protocols, I will be talking about the following.
Band Protocol launches Phase 2 to bring off-chain data to DeFi
The band protocol after many years of using the band chain phase 1 has decided to lunch phase 2 that will enhance the oracle network in terms of providing data such as events, assets prices, and sports outcomes to the decentralized ecosystem.
In the update, it is said that phase 2 BandChain will allow a commercial platform that is already working with the protocol to give information to smart contracts. These commercial bodies are Bloomberg and Google Cloud, they generate income from carrying out these activities. Let's take a look at another development below.
Coinbase Consumer Lists Band Protocol (BAND)
Another exciting development that will boost the usability of the Band token.
Coinbase is one of the prominent marketplaces in the crypto industry, it has recently released an update on listing the BAND token, which means the band protocol token will be available to users of the Coinbase platform all over the world.
Huobi Futures Launches Band Protocol (BAND) Perpetual Swaps
Another development is on the popular trading platform form called Houbi Global. Houbi Global is a marketplace trading cryptocurrency with different trading pairs and is also strong in terms of securities.
In a recent update, it has disclosed the announcement of BAND token in the Huobi futures trading to add the token in the perpetual swap to enable users to select between 1x-75x leverage.
There are many recent developments in the band protocol ecosystem, let's take a look at the partnership between Omm Finance below.
Omm Finance Partners With Band Protocol For Mainnet Launch of Open Money Market
Omm Finance, a cross-chain open money market where anyone can lend and borrow assets, and also backed by top tier funds such as Hashed, CMS Holdings, and FBG Capital, has partnered with Band Protocol for secure and decentralized price oracles upon launch on the Mainnet. Src
OMM planned to lunch ICON Network with three borrowing markets for ICX, USDS, and IUSDC where the band protocol will be utilized to update the platform with price feed, to retrieve reliable and correct rates borrowing limitations, liquidation mechanism, and risk ratios.
Furthermore, it has scheduled the work with the protocol with an aggregate of at least 10 reliable crypto institutions that would be providing data. It has 2 different parameters to update the price, the first which is 0.5%, and the second which 5 minutes as a default time interval. Now, it makes sure that Omm finance is using real-time market data to secure users from any points of failure.
Now, let's go the other way, what kind of project do you think band protocol will introduce. You know, every industry has an issue and will fight to solve the shortcomings. So what I think in this area is that any project coming up on this protocol should for the solving of their shortcomings.
Conclusion
In conclusion, I want to thank the professor for bringing up such an amazing topic. I now understand the importance of blockchain oracle to the real world. I still have that strong feeling that blockchain oracles will grow more than what it is today as they tend to provide the DeFi world with information outside their scope.
Let's keep a watch on these innovations, we never can tell what the future holds. All the same, I appreciate the professor again for bringing up this topic, it was really nice exploring the world of blockchain oracles. Thank you for reading through to the end.
Referrence Purposes
Reddit.com/r/bandprotocol
Medium.com/bandprotocol
Thanks once again! see you soon...
Hello, @bright-obias Thank you for participating in Steemit Crypto Academy season 3 week 7.
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Hello, @bright-obias
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