Steemit Crypto Academy Season 3 Week 7 | Homework Post for Prof.@allbert | Blockchain Oracle - Band Protocol
Thank you Prof.@allbert for your wonderful lecture. I learned a lot from it.
Blockchain Oracle
Blockchain oracle basically bridges the gap between the outside world and blockchains. We know that smart contracts play a very vital role in blockchain technology, they allow transactions between users to be executed safely. To further enhance the security and reliability of those transactions, smart contracts require the necessary and relevant information relating to contracts and other matters to successfully execute an agreement.
We also know that smart contracts themselves cannot access the data from the outside world, and this is where blockchain oracles come in, they serve as a connection between on-chain (data in the blockchain network) and off-chain data (data outside the blockchain network). They provide smart contracts with the necessary off-chain data for it to analyze and convert it to a language it can understand for the execution of the contracts and this helps in maintaining the integrity of the crypto market.
They are important because they widen the scope of operations for smart contracts. They allow smart contracts to have unbounded uses as they can access information from outside their networks.
Blockchain oracles are not the source of the information, they are just the medium that queries verify, and authenticates outside data information sources through APIs (Application Programming Interface) and passes along that information. This information can be the temperature measured by a sensor, the successful execution of a payment, price information, information from sports, etc. Some oracles are capable of passing information from smart contracts to external sources as well.
Some examples of blockchain oracles are; Chainlink, Band Protocol, Witnet.
Band Protocol
History
The Band Protocol was launched in September 2019 in Thailand. It has three founders, Surawit Suriyakarn (chief technology officer), Soravis Srinawakoon (chief executive officer), and Paul Nattapatsiri (Chief product officer).
When it was supported with about $5M in capital in the year it was applied to the Ethereum blockchain network, it also had support from investors like Sequoia Capital. Then an initial coin offering was undertaken on the Binance LaunchPad where it was able to gain about $5.85 in addition.
The protocol was first established as an ERC-20 project on the Ethereum network then in June 2020, it was moved to its own blockchain called Bandchain which made it independent from other blockchain networks but it provided data to other blockchain networks since it is a public service.
Bandchain was aiming at conveying data from the outside world across unconnected blockchain networks. Then the protocol’s data is conveyed from the preceding network to the new one, to create scripts that can gain access to publicly available databases as a source of data for free without any restrictions.
Description
The protocol is a decentralized cross-data oracle project that enables information to be readily available to be queried on the network with the delegated proof of stake built on the cosmos SDK, this guarantee helps to guarantee the integrity of the data. The cross-chain feature means that the protocol can give data to multiple blockchains, like Defi DApps this gives it an advantage in the crypto world because it is a rare feature. Band protocol was the first entity in blockchain to embracing the idea of APIs.
The protocol runs on Bandchain which is a delegated proof of stake blockchain. The purpose of bandchain is to execute oracle computation, like aggregation, settlements, and data sourcing.
How Band Protocol works.
The Band protocol basically connects data from the real world outside the blockchain to decentralized apps that are smart contracts based on blockchain.
The software takes care of orders for data from DApps and conveys or transmits the information using data feeds from outside the network. This happens through the use of its own blockchain (Bandchain) which guarantees the reliability and safety of transactions by allowing them to be checked and validated in public. This aims to prevent the data supplied from being altered, corrupted, or otherwise made inaccurate.
The protocol involves validators, they are obliged to confirm the accuracy of transactions on the blockchain and to add new transactions to the blockchain network. The top candidates for validators with the most Band tokens are chosen to be validators and they must follow certain rules like staying online, attending to the events on the network, and confirm transactions precisely. If they fail to abide by the rules, they may be punished by ceasing part of the BAND tokens they possess. A validator on the Band protocol should hold a certain amount of the BAND token which can be delegated to other users.
The BAND token
The native token of the Band protocol is the BAND token. It was released in September 2019 in an initial coin offering on the Binance LanuchPad. 27.37% of the token's total supply (100,000,000BAND) was sold through three token sale sections; seed, private, and public sale.
This token was in the past, based on the ERC-20 standard, it was later relaunched as the native token of the Band protocol. Those with the older token had to perform a 1:1 token swap of the ERC-BANd and the native BAND token before they can be used to stake on the blockchain network.
The BAND token is listed on coinmarketcap with a ran of 153 and a current price of $8.25 which has recently increased about 13.64%. it has a market capitalization of $290,357,623 and a 24hour trading volume of $130,671,340. The total supply of the coin is 100,000,000BAND with 35,191,821BAND in circulation.
The coin is listed on both decentralized and centralized exchanges;
• Centralized: Binance exchange, Coinbase, and Huobi.
• Decentralized: Uniswap and Kyber Network.
Functionalities and real-life application
The Band protocol was created to correct the issue of smart contracts not having access to data from the outside world which restricts the maximum potential of the contracts. Band protocol solved this situation by connecting the public blockchain to the outside world.
According to the whitepaper, the project was made with the following functionalities.
• Speed and Scalability: It can provide a huge quantity of information requested to multiple blockchains with minimal response time and high efficiency. The system response in an order of seconds.
• Cross-chain: this means the system can provide information to almost all blockchains available publicly. The confirmation of the authenticity of data on the blockchains is very productive and trustless in nature.
• Flexibility: the system is universal and can support other ways of extracting and aggregating data comprising of permissionless information that is publicly accessible along with data protected by centralized parties.
• The protocol can send its data output to different blockchains through the use of cosmos IBC. Cosmos IBS is a communication layer that enhances communication between different blockchain networks.
Pros and Cons of the Band Protocol
The Band protocol has its advantages and disadvantages. Let’s have a look at them
Advantages
• Users who hold BAND coins can partake in the governance of the Band protocol.
• The protocol supports a large number of smart contracts which makes it very accessible.
• Data retrieved by the protocol is very reliable and secured as the same validators are responsible for those features
• Without any intermediary, data can be commercialized.
• Delegates earn rewards based on their delegated contribution of the BAND token which is the amount of BAND staked by the validator.
Disadvantages
• The network cannot be successful without the BAND token to motivate the validators. And also, the fall of the price BAND to a very low level will influence the productivity of the platform as the validators are motivated with the token.
• The BAND tokens cannot be traded or HODL, they can only be staked.
• About 2% of the profit of the validators, for every block they add is channeled to a community financial fund.
• The low efficiency of the validators will result in the low efficiency of the network since it depends heavily on them.
Future developments and new projects of the Band protocol
The system of the Band protocol is universal and can be adjusted to different platforms and not only decentralized ones. Due to this, the protocol was able to announce on 15th April 2021 that they will be collaborating with Google Cloud to provide instant data in finance. Google Cloud users will also be able to create DApps with the help of Band protocol. Enter the link to read more link
The official page of Band protocol and medium tweeted on 9th August 2021 that will be advancing and strengthening their bond with the decentralized Fantom network. Enter the link to read more link
On 6th August 2021, there was an announcement on the Kraken platform that they will be listing the BAND token on their platform on 10 August. Click the link to read more on the news link
The Band Oracle is one of the biggest competitors of Chainlink. In this position, Band protocol will have to stay high by bringing more projects. So I am hopeful that more projects will be introduced soon.
Conclusion
Blockchain oracles bridge the gap between blockchains and the outside world. Data from the external world is needed is very necessary to improve the scope of application of smart contracts and that situation is handled by the existence of blockchain oracles. Band protocol is one of such blockchain oracles.
The Band protocol is a fascinating and progressive project with a great future and potential. It guarantees quick and trustworthy information for smart contracts and also has a very user-friendly platform for using its native token. The native token, BAND, is used to stake on the platform and it’s listed on platforms such as Binance exchange, Coinbase, Huobi, Uniswap, and Kyber Network.
It has a cross-chain feature that allows it to share data to multiple blockchains and it also has high scalability and speed.
Thank you
Hello, @gentles Thank you for participating in Steemit Crypto Academy season 3 week 7.