Blog Borrowing Band coin review: Is BAND a worthy investment in 2021?

Band coin review: Is BAND a worthy investment in 2021?

date February 22, 2021 time 7 min read 42 views

Band protocol is a decentralized oracle platform that supports multiple types of blockchains like Ethereum, Cosmos and Polkadot. Band protocol’s native token, BAND coin, is used for governance, payments, staking, and rewarding node validators. Here’s how Band protocol has managed to become a rising player in the oracle space and what the future holds for BAND coin.

While smart contracts on the blockchain are increasingly used today with the rise of DeFi, they still face a major problem: the “oracle problem.” 

Smart contracts need a constant feed of accurate and reliable data to operate (for example, live crypto prices when initiating trades). These contracts are only as good as the data they receive and if that data is wrong, users can lose lots of money. If data running a major smart contract comes from a single, centralized data source (also known as an oracle) any error in the oracle can be devastating for the entire network.

BAND protocol was created to solve the problem of centralized oracles by creating a wide network of data sources on the blockchain that have an incentive to give high-quality data to the blockchain.

Decentralized oracles provide accurate, real-time data for smart contracts
Decentralized oracles provide accurate, real-time data for smart contracts (source: coinmarketcap.com)

Thanks to the increased demand for decentralized finance among other factors, BAND’s native coin, BAND coin, has grown over 2,000% in the 3 years since its inception. BAND coin went from less than $1 at their 2019 Initial Exchange Offering (IEO)to more than $15 in 2020.

Despite its success, BAND protocol still competes heavily with another decentralized oracle called Chainlink. Chainlink has a market cap more than 40X that of BAND and their native LINK token is valued at more than double the price of BAND

So what does BAND have to offer over competitor and what does the future of BAND protocol look like? Is BAND coin an investment worth considering in 2021 and beyond? 

Read on to find out.

What is Band Protocol?

As mentioned earlier, Band protocol is a decentralized oracle that feeds real-world data to smart contracts and DApps (decentralized apps) on blockchains. 

The Band protocol was created to solve the challenges of centralized oracle solutions and native blockchain oracle services by: 

  1. Providing accurate, real-time data from decentralized sources

Band’s data is sourced through community-driven data curation (decentralized curation) and therefore is more verifiable and reliable than a centralized source. 

  1. Enabling cross-chain compatibility
BAND protocol can receive data from multiple blockchains apart from Ethereum
BAND protocol can receive data from multiple blockchains apart from Ethereum (source: pixabay.com)

While many other blockchain oracles in the market today only work with major players like the Ethereum blockchain, BAND can receive data from Ethereum as well as many more blockchains like Polkadot and Cosmos. 

For developers looking beyond major chains like Ethereum into less-used blockchains, Band protocol can be a great partner.

What is BAND Coin?

BAND coin is the native coin of the Band protocol. It is used to incentivize its decentralized network through a Proof of Stake (PoS) system. It also provides voting rights to the community.

Users who run nodes on the Band Network can verify oracle data in exchange for a reward of more BAND coins. However, to verify data they must stake their own BAND tokens into the network. If a node owner acts maliciously and verifies incorrect data, then the BAND they stake are taken from them as a penalty. This gives them a financial incentive to provide accurate data.

BAND token’s target markets

Smart contract and Decentralized app (DApp) developers

Band protocol mostly works with financial smart contracts and DApps and gets its data from providers such as Binance and Coingecko. But it has also found use in other fields such as weather and sports. 

Smart contract developers can use Band to send data reports to their applications without needing any special kind of subscription. DApp developers can use data from Band Protocol oracles with just a few lines of code.

Crypto speculators

As with many blockchain projects, holding the Band protocol’s native BAND coin also works as an investment in the success of the protocol. The more Band protocol is used on the blockchain, the more popular BAND tokens become and the more value they get on the market.

While Band has been growing steadily, competitor Chainlink holds the lion’s share of the decentralized oracle market.

According to decrypt.co, more than 315 sites had integrated the Chainlink oracle by November 2020. Platforms also continued to join Chainlink almost daily. As of February 2021, there are already dozens of new Chainlink integrations.

Some of the platforms that have incorporated Chainlink are: 

  • DeFi platforms like Aave and Paxos
  • Blockchains like Moonbeam and Polkadot networks
  • Data providers like Coinranking and Binance
  • Node operators like Stake Fish and Validation capital.

While Band protocol may have a smaller market share (with at least 95 partnerships), Band’s differentiating factor is that its mainnet, BandChain, is built on the Cosmos network. 

Most oracles, including Chainlink, are built on the Ethereum network. Some of the benefits that Band protocol has gained by building its blockchain on Cosmos are:

  1. Reduced data costs

A single transaction can cost hundreds of dollars on the Ethereum network. By operating on Cosmos, Band protocol reduces its costs by over 80%.

  1. Faster data transfer 

Since Band doesn’t have to deal with delays that happen on Ethereum due to congestion from competing resources, it can transfer data in as little as 2-3 seconds.

Band protocol also has lower energy consumption from the Proof of Stake (PoS) framework of Cosmos as opposed to Ethereum’s Proof of Work (PoW) system.

  1. Ease of design

Unlike on Ethereum, tasks such as creating complex P2P protocols, cyber security, and consensus algorithms, are all done by the Cosmos’ user-friendly Tendermint backbone.

BAND coin history

Band protocol initially launched as an ERC-20 project on the Ethereum blockchain in September 2019. 

Initial exchange offering

Band started selling BAND coin through two private offerings which took place between June and August 2019. The coins sold at $0.40 and $0.30.

At Band’s Initial Exchange Offering (IEO) in September 2019, the company released the BAND coin as an ERC20 token. The coin was sold at 0.47 US dollars per token at the IEO.

Release of Band protocol 2.0

Band protocol 1.0 didn’t pick up well among users in part because it was built on an inefficient Ethereum blockchain. 

In June 2020, Band released Band protocol 2.0 and transitioned to its own mainnet, BandChain, built on the Cosmos SDK. They then allowed customers to transfer their ERC20 BAND coins over to mainnet coins. The ERC20 coins are still in circulation.

In October 2020, Band upgraded it’s mainnet to BandChain Phase1. The new development allows all BandChain validators to fulfill data requests for fee rewards from Band’s developers and partners that incorporated the Band Protocol.

Band Partnerships

  1. Some major smart contracts that have integrated Band protocol are ICON, Elrond , Mirror synthetic protocol, Terra, Fantom, andMoonbeam protocol.
  2. Band recently joined the OpenAPI initiative with Google, Microsoft, IBM, and others to define a common API (Application Programming Interface) across different companies and platforms. This initiative helps companies like Band understand how other companies relay data to each other in a common standard to ease scaling. Band hopes this will allow them to bring better outside data into blockchain apps.
Band protocol uses strategic partnerships as a strategy to increase adoption of its protocol (source: pixabay.com)

BAND coin price

BAND coin price remained between $0.20-$1.20 from the IEC until mid-2020.

On August 6, BAND coin rose by 65% in 24 hours, from $4.825 to $8 following a Coinbase announcement that it would list BAND on its platform.

BAND Coin’s price reached a high of over $17 on 20th Aug 2020. The increase was attributed to several factors including increased DeFi hype and some of Band’s strategic partnerships.

The value of BAND has since dipped. The fall is most likely thanks to its small market cap which is 40X less than that of its main competitor, Chainlink.

The future of band protocol

Band is still focused on becoming the go-to oracle platform for blockchain-based DApps by creating more partnerships and carrying out platform developments. Some of BAND’s 2021 plans include: 

  • Introducing BandChain Phase 2 

The focus will be to extend built-in support for both permissioned and firewall APIs from  premium data providers. Band hopes this will help enable secure access to all the data on the internet for DApps and blockchains. 

  • Adding Cosmos IBC Compatibility to BandChain Phase 1 

This will make it simple for any Cosmos-based blockchain to use the BandChain oracle natively. It will also ease integration into other blockchains.

  • Improved UX

Band wants to become not only a completely permissionless platform but also a self-service interface where developers can work without assistance. This will help to increase decentralization.

Where to buy Band coin

You can buy BAND coins from most top exchanges including Binance, ZG.com, HBTC, OKEx, Huobi Global, and Coinbase Pro.

Decentralized exchanges like Kyber Network and Uniswap also trade BAND pairs.

You can also buy BAND using FIAT money  on Coinbase Pro. Accepted currencies are GBP, USD, and Euro.

BAND coin wallets: Where to store BAND

Some of the crypto wallets where you can store BAND coin are:

  • COINS multi-crypto wallet
  • Ledger hardware through the Cosmos app
  • Atomic wallet
  • MyConstant multi-crypto wallet

How to buy BAND coin without selling your crypto

If you want to buy BAND without having to trade your crypto, you can take out an instant crypto-baked loan on MyConstant at a low rate of  between 6.5-7% APR. What’s more, you can choose from over 70 different cryptos as collateral.

MyConstant also provides great features like:

  • 24/7 customer service by email or phone
  • You can back your loans with multiple cryptos
  • Early repayments for a lower rate
  • Easy onramps from fiat to crypto

Sign up for a free account today, and start doing more with your crypto.

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