What is Band Protocol (BAND)?
Band Protocol is software designed to encourage a network of users to provide real data to decentralized applications (dapps) running on block chains.
For example, if a dapp developer wants to allow its users to place bets on the future price of gold, it will need to be able to determine its price at the desired later date.
To ensure that its smart contracts perform correctly, Band Protocol provides this service through software that encourages a special class of its users, known as validators, to provide and verify external data.
In this way, Band Protocol is often described as a “decentralized oracle” system, a description given to blockchains like Chainlink, which, like Band, encourage users to provide verifiable data.
Originally running on the Ethereum blockchain, Band Protocol eventually built its own blockchain using the Cosmos technology to relay data between different blockchains, including those created in Cosmos.
Who Created the Band Protocol?
Band Protocol is developed by a startup of the same name based in Thailand. It has three founders: Soravis Srinawakoon, who serves as CEO; Sorawit Suriyakarn, chief technology officer; and Paul Nattapatsiri, product director.
In 2019, Band Protocol raised $3 million from venture capital firms, including the Indian unit of legendary investor Sequoia Capital. Later that year, it raised another $5,85 million in an Initial Exchange Offer (IEO).
The protocol had an initial supply of 100 million BAND tokens, 12,37% of which were sold during token sales. The Band also conducted private token sales, raising $2 million in this way.
In total, more than 27% of the BAND token supply was sold to early investors. Another 25% of BAND tokens are reserved for the Band Protocol ecosystem and 22% were reserved for the development team and the foundation that oversees development.
Why Does BAND Have Value?
Notably, the Band Protocol applies an inflation schedule to your BAND cryptocurrency, which means that, over time, the value of each BAND token is reduced.
The reason for this is to encourage users to deposit their coins with validators. When a user deposits coins with a validator, they earn tokens to offset the rate of inflation.
The Band inflation rate varies from 7% to 20% and varies according to the total BAND value deposited in the validators. The desired amount is to have two-thirds, or 66% of all BAND tokens, deposited with validators.
Depositing coins with a validator is also known as stakeout, and users who staking the BAND earn freshly mined protocol tokens as well as fees from applications that use their service.
In addition, BAND holders who staking their funds can enjoy bonus tokens from an ecosystem fund that rewards first-time users. The fund offers 3,16 million bonus tokens in the first year, up to 315.000 tokens in the fourth year.
These mechanisms mean that the Band Protocol rewards BAND holders for their participation in maintaining the system and ensuring that it provides accurate external data to users.
Band Protocol Price
How does Band Protocol work?
The Band Protocol acts as an intermediary between legacy Internet data sources and block chains.
The software handles data requests from decentralized applications and transmits information using data feeds from the rest of the Internet.
He does this using his own blockchain, which allows all your transactions to be publicly verified and validated.
The Band team argues that this helps ensure that the data provided by its users is not manipulated, inaccurate, or otherwise corrupted.
Validators are responsible for verifying that Band Protocol transactions are accurate and for adding new transactions to the Band Protocol blockchain.
A validator in Band Protocol must be in control of a certain amount of BAND tokens, which it can either buy on its own, or be delegated by another user.
The top 100 candidates with the most BAND tokens are selected by the network to become validators. Validators must abide by certain rules, such as ensuring they don't go offline, responding to network events, and accurately confirming transactions.
If they don't, the network may confiscate some of the BAND tokens they have.
Why Should I Use the BAND Protocol?
BAND can be interesting if you believe that decentralized applications will continue to proliferate and that this software will require data to be validated by other blockchains.
You may want to use the BAND if you want to participate in the design of this system, as having the BAND means you can vote on proposals that affect the rules of the system.
As demand for the system grows, these proposals can affect how much you earn with your BAND stake tokens.
However, Band Protocol is not the only decentralized oracle system that runs on a blockchain. Competitors such as Chainlink are also popular and can put pressure on BAND's price.
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