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Band Protocol, a cross-chain data oracle platform, was designed to facilitate the transfer of real-world data to on-chain applications, thereby bridging the gap between on-chain and off-chain data sources by connecting APIs to smart contracts. Its design and operation foster an ecosystem where developers can utilize real-world data in their decentralized application (DApp) logic from sports and weather information to random numbers and price feed data.
Initially, Band Protocol was an ERC-20 project launched on the Ethereum blockchain in September 2019. However, it transitioned to the Cosmos network with the release of Band Protocol 2.0 in June 2020, constructed on BandChain utilizing the Cosmos SDK. This protocol's unique feature is that the oracle nodes on BandChain not only transmit data but are also involved in block production/validation to assign them a dual role. The Band Protocol ecosystem utilizes its native token, BAND, as collateral by validators responsible for fulfilling data requests. The token is also the primary medium of exchange on BandChain to allow for the payment for private data. To maintain data authenticity, Band Protocol employs a Verifiable Random Function (VRF), a cryptographic measure that ensures tamper-proof results.
Band Protocol has carved a niche as a decentralized oracle system that encourages its users, specifically validators, to provide and verify external data. This system is beneficial for DApp developers who need accurate, verifiable data to facilitate their applications' operations. The protocol further extends its functionality by being adaptable to different blockchains due to its construction using Cosmos technology.
As a liaison between traditional Internet data sources and blockchains, Band Protocol handles data requests from decentralized applications and transmits information using data feeds from the rest of the internet via its own blockchain. This setup allows for public checking and validation of all its transactions to ensure the accuracy and integrity of the data it delivers.
Validators play a critical role within the Band Protocol ecosystem. They are tasked with verifying the accuracy of transactions on the Band Protocol and adding new transactions to the Band Protocol blockchain. To become a validator, one must control a certain amount of BAND tokens, either purchased or delegated by another user. The network elects the top 100 candidates with the most BAND tokens as validators. To maintain order and reliability, validators must adhere to a set of rules, including maintaining an active online status, timely responding to network events, and accurately confirming transactions. A penalty in the form of a confiscation of some of their BAND tokens can be implemented if they fail to comply.
Underpinning the Band Protocol is a Delegated Proof-of-Stake consensus mechanism secured with its native BAND token. The BandChain currently hosts over 90 professional and community node operators. Each operator must stake BAND tokens on the network to discourage malicious behavior. Validators are rewarded with a portion of query fees and block rewards for successfully processing data requests. BAND token holders can participate in the network. In addition to earning staking rewards and collected data request fees, BAND tokens also enable protocol governance.
BAND, the native token of Band Protocol, plays a crucial role in the chain's operation by incentivizing validators to create new blocks and respond to data requests. The token has three significant uses: deploying validator nodes, earning inflationary rewards and a fraction of collected fees by delegating them to other validators, and participating in the governance of the chain. BandChain implements an inflationary model for BAND, resembling that of the Cosmos network, to prompt token holders to delegate their coins to network validators rather than solely trading or inactivity. The inflation parameters consist of a 7% to 20% annual inflation range and adjustments to ensure 66% of the total BAND token supply is staked. Therefore, token holders who stake their coins maintain a relatively constant holding ratio due to a proportional share of coins to inflation.
As of now, BAND (Band Protocol) is ranked #158 by CoinMarketCap with market capitalization of $158,853,492 USD. The current circulating supply of BAND coins is 132,609,769.
Data oracles such as Band Protocol play an essential role in fostering the growth of decentralized finance (DeFi). By providing a conduit for off-chain data to be accessed by smart contracts and the decentralized economy, the Band Protocol network facilitates the scalability and expansion of the sector. As Band Protocol continues to deploy its Mainnet in phases and scales, it is anticipated to evolve into a truly decentralized and trustworthy data oracle provider. With its high speed and low cost, it has the potential to overtake its strongest competitor, Chainlink, in the future. Furthermore, the potential growth and future bullish price predictions make BAND an attractive investment for crypto enthusiasts.
Comparing Band Protocol with Chainlink, two dominant names in the data oracle space, provides an insightful perspective. Both platforms are integral in providing oracle data solutions that empower the DeFi economy. Chainlink, launched in 2017, controls the largest market share in the data oracle niche, with its total value secured (TVS) exceeding $75 billion by the end of 2021. Band Protocol, launched two years later, has been rapidly catching up. However, the two platforms have distinct features and approaches to providing data oracle solutions. Chainlink operates on the Ethereum blockchain, while Band Protocol migrated to the Cosmos blockchain. This shift gives Band Protocol a significant advantage as transactions are almost instantaneous and considerably cheaper compared to the high gas fees and low throughput characteristic of Ethereum.
Furthermore, Band Protocol has developed BandChain to serve as its public blockchain, in contrast to Chainlink, which does not have its blockchain. Band Protocol's design may lead to higher operating costs due to the dual role of its oracle nodes as block validators. BAND's promising technological advances, coupled with potential price growth, indicate that it could indeed be a sound investment. However, as with any investment, it is crucial to conduct thorough research and consider the inherent risks associated with investing in cryptocurrency.