What is Band Protocol? How Does Band Work?

Introduction

Fintech and other application areas carry the potential of a bright, decentralised future thanks to distributed applications. However, dApps created using smart contracts based on blockchains have a technological problem that may prevent this dream from coming true. Blockchain oracles like Band Protocol can help with that. Oracles overcome the restrictions of smart contracts to enable the full potential of blockchain-based dApps.

Are you curious about the Band Protocol and its related BAND token? Read on. This post will explain the technology and get you ready to invest in the project through the internet’s fastest, friendliest cryptocurrency marketplace.

What is Band Protocol (BAND)?

As currently designed, smart contracts have a fatal flaw that could prohibit them from supporting the foundation of genuinely beneficial dApps.

Consider creating a decentralised application (dApp) that enables users to conduct transactions automatically when specific criteria are satisfied. For instance, if gold prices drop by $100 or more over a month, a user may decide to raise their Ether holdings by 10%.

The issue is that while your dApp operates on the blockchain, websites that aren’t on the blockchain report gold prices. Your smart contract cannot import the gold price onto the blockchain via a bridge. 

Band Protocol is one of a few blockchain oracle platforms addressing this issue. Oracles act as gateways that let intelligent contracts based on blockchain access trustworthy, verified digital data from beyond the network.

Band Protocols operates a public blockchain that complies with Cosmos standards called BandChain. On BandChain, stakeholders verify data from digital inputs so that smart contracts on Ethereum and other blockchains that support smart contracts can access the data. Your application can use Band Protocol as a trustworthy oracle for information on the price of gold.

The utility and governance token for the Band Protocol project is called BAND. A certain minimum number of BAND tokens or the validation powers granted to them by other BAND holders are requirements for becoming a validator.

How Does Band Protocol Work? 

New data sources generally become available when a data holder utilises a public API to demand publication of its data on the BandChain. To get their data published on the BandChain, providers must pay. Every time a smart contract or dApp accesses the data, they are born.

Band Protocol performs complicated computations to calculate how much to pay data providers to be represented on the BandChain and how much to cost developers and consumers for data access.

On BandChain, Band Protocol has built a network of validators. The validators rely on a consensus mechanism built on the blockchain to determine the legitimacy and dependability of data sources.

The payment method for Band Protocol services is BAND, which both data suppliers and users accept. It is employed to pay data sources and reimburse validators for their labour.

Cryptocurrency exchanges also offer BAND for investment purposes. By ensuring that BAND loses value over time via a systematic inflation schedule, the Band Protocol discourages holders from just holding the token. However, when assigned to validators, BAND tokens generate a healthy return — at the moment, roughly 15.5% annually.

How to Choose a BAND Wallet?

Tokens from BAND can be kept in almost any cryptocurrency wallet. Using an encrypted hardware wallet is one of the most excellent methods to keep BAND and other cryptocurrencies safe. Ledger and Trezor’s hardware wallets are among the most well-liked ones. Hardware wallets retain confidentiality through sophisticated encryption methods. Some even support tools that help you regain access to your cryptocurrency cash if your wallet is damaged, lost, or stolen.

Software wallets are an additional choice that is both free and simple to use. They might be custodial or non-custodial and can be downloaded as desktop or mobile applications. With custodial wallets, the service provider manages and backs up the private keys on your behalf.

Conclusion

Online wallets, also known as web wallets, can be accessed from various devices using a web browser and are also free and simple to use. However, they are regarded as “hot wallets” and might not be as secure as hardware or software alternatives. You should choose a trusted company with a solid reputation and experience in security and custody because you probably entrust the platform to manage your BAND. They are, therefore, best suited for people who hold fewer coins or engage in more frequent trading.