Band Protocol is an upcoming blockchain-agnostic decentralized oracle that claims to offer speed, scalability, cross-chain compatibility, and data flexibility. Figment is currently active on Band Protocol’s BandChain network and will be supporting delegations to our validator once enabled.
What is Band Protocol?
Band is an open protocol that facilitates the governance of data used in decentralized blockchain systems. While many decentralized applications rely on centralized data providers, Band Protocol leverages a wide network of oracle networks to fetch external data and APIs from various sources, and output aggregates oracle results for decentralized applications such as DeFi to use. This data ranges from cryptocurrency price feed to stock, commodities, and other real-world events such as sport results and weather.
The project was founded by Stanford and MIT Cofounders Soravis Srinawakoon, Sorawit Suriyakarn, and Paul Nattapatsiri. The team has 10+ employees and is growing. With offices in Bangkok, they are one of the largest blockchain projects in Thailand. Band is the first Thai blockchain startups invested by Sequoia Capital, Binance and Dunamu & Partner (Upbit).
The Oracle Problem
Current blockchains like Ethereum cannot access data outside of their network, but blockchains need access to real world data in order for them to lead up to their full potential. Many blockchains currently use centralized oracles to feed real world data into these networks, but this leads to a security issue since real world data is not fed into blockchain networks in a trustless way.
For example, some smart contracts on Ethereum rely on real world data to execute. If oracles feed bad data to these blockchains then it can completely change the behavior of these smart contracts.
This leads to an issue known as the oracle problem. Band Protocol plans to solve the oracle problem by creating a decentralized bridge between the real world and Web 3 protocols. Their decentralized network of data providers will have “skin in the game” via a Proof of Stake consensus, which will allow end users to have a higher degree of confidence in the quality of data entering the Web 3 ecosystem.
Band Protocol was originally built on Ethereum, but the team is currently building a new chain within the Cosmos ecosystem called BandChain. The decision was made because the team sees Tendermint and Cosmos SDK as a scaling solution, while also providing flexibility and easier access to other networks within the Cosmos ecosystem. It is expected that BandChain will be able to process thousands of transactions with instant finality and have the ability to send data across multiple blockchains.
Data providers will be able to monetize their data by bringing it into the blockchain ecosystem via BandChains decentralized set of oracles.
Developers will be able to connect their decentralized applications to these data sets via BandChain’s customizable Data Oracle Script.
Because of its blockchain design, the data BandChain will be able to provide is quite flexible. Their focus for phase one will be in providing public web data that is necessary for DeFi applications, prediction markets, insurance markets, as well as sports data for gambling applications. Their future focus will be on providing permissioned web data such as bank account transactions.
The BAND Token
The BAND token will be the native token on BandChain. At launch, the BAND token will be used in 5 ways:
- Validators (data providers) have to stake BAND token in order to provide data and ensure they have skin-in-the-game in providing correct data
- It will be used as a way to distribute rewards to validators who produce new blocks and submit responses to data requests.
- Token holders will be able to delegate their tokens to existing validators in order to earn a portion of the validator’s rewards.
- BAND tokens are used as a query fee which is baked into transaction fee on BandChain
- Token holders can use their tokens to participate in on-chain governance.
Much of the parameters regarding BandChain’s network economics are similar to other networks within the Cosmos ecosystem.
BandChain will use an inflationary model to reward validators and delegators who participate in the network. The annual inflation rate will adjust between 7% and 20% based on the participation rate with a targeted network participation rate of 66%. Validators and delegators will receive a higher inflationary reward if the participation rate is lower and vice versa.
BandChain plans to launch with 100 validators in their active set. There is no requirement to be in the active set as long as you are in the top 100 by total amount staked.
Validators are randomly chosen to perform work on BandChain based on stake weight. Therefore, validators with more stake have a higher chance of being selected to perform work when compared to a validator with less stake.
Choosing a Validator
It is recommended that delegators perform due diligence when choosing a validator to delegate to. Commission fees validators charge, uptime, and reputation both on BandChain and on other networks should be taken into consideration when choosing a validator.
Validators and their respective delegators can be slashed for 3 reasons:
- Excessive downtime – If a validator has not participated in block proposals and commits for an extensive period of time.
- Double signing – If a block producer attempts to create conflicting blocks and broadcast them to the network.
- Unresponsiveness – If validators fail to respond to data requests.
Specifics around amount slashed have not been released yet, but the team has stated that they will be similar to Cosmos (i.e. 5% slash for double signing and 0.01% slash for ~18 hours of downtime).
Slashing for unresponsiveness is not expected at launch, but Band Protocol plans to implement a slashing penalty for unresponsiveness in the future. There will also be token slashing conditions for providing bad data as well, but this is currently in the research phase as “bad data” is a subjective problem.
Similar to Cosmos, there will be a 21 day unbonding period.
2% of all block reward will be diverted to the community pool. These funds will be used to fund future developments necessary for the longevity of the BandChain ecosystem. Decisions on how these funds are used are made in accordance with BandChain’s on-chain governance model.
BandChain plans to roll out token transfer and staking starting June 10th. More information will be available at a later date and will be included in this article retroactively.
Blockchain within the Cosmos ecosystem and any blockchain that is EVM-based will be supported at launch, with Band Protocol planning to support other blockchains at a later date.
We can also expect more payment options to be made available at a later date.
Figment was an active participant in BandChain’s Wenchang testnet and is currently active on BandChain’s mainnet.