Another sprinter has entered the cryptocurrency oracle race, this one backed by Sequoia Capital and Binance.
Band Protocol 2.0 launched Wednesday with its mainnet oracle solution, BandChain, leveraging the Cosmos SDK, according to a release from the firm. The project’s revamp comes 10 months after listing as an initial exchange offering (IEO) on Binance Launchpad and a $3 million 2019 seed round led by Sequoia India.
“Band Protocol is launching at a momentous time with the Inter-Blockchain Communication (IBC) protocol stabilizing,” Zaki Manian, director of Tendermint Labs, said in a statement. “There will soon be a network of chains who can take advantage of the flexible data script and real-time data requests enabled on the BandChain mainnet.”
The technical ability to place real-world data onto a blockchain network is alluring though still very much in question. To date, Chainlink has dominated the oracle space, nabbing integrations with scores of crypto projects, but others are rushing in with competing visions.
Initially run on the Ethereum blockchain, Band Protocol built out its own blockchain on Cosmos technology to sidestep congestion concerns, co-founder and CEO Soravis Srinawakoon told CoinDesk in an interview.
As previously reported by CoinDesk, Band Protocol first launched in 2017 with the intention of tackling, among other things, “fake news” through a tokenized oracle platform. The Thailand-based team also launched a decentralized trading app, BitSwing, in October 2019.
The firm’s new offering, BandChain, will launch in three successive stages including the on-boarding of community, professional and ecosystem partners as validators, the release states.
Decentralized price feeds provide information by querying multiple off- and on-chain sources such as, in BandChain’s case, a Bloomberg price feed. Data accuracy is assured by validators staking the network token, BAND, as collateral.
Data pulled from on-chain sources has its drawbacks, however.
The oracle race
Blockchains are notoriously slow and are prone to transaction bottlenecking when multiple users are competing to execute transactions at the same time. For products depending on oracle solutions, the problem is compounded: decentralized applications (dapps) are dependent on oracles to execute transactions which are then dependent on the underlying blockchain.
If that blockchain cannot execute the order for the oracle, then dapps cannot execute their transactions either. This most recently came to a head on March 12’s “Black Thursday,” where overwhelming sell pressure from the plummeting price of ether (ETH) caused a cascade of technical failures, including momentary operational lapses for both Maker’s V2 oracles and Chainlink.
Srinawakoon said Cosmos’ underlying tech prevents on-chain congestion – and therefore transaction failure – by grouping transactions together in a way Ethereum cannot currently do.
The team chose to build on Cosmos over Polkadot, another interoperability project, because Polkadot has yet to fully launch, as well as perceived costs, Srinawakoon said.
“For Polkadot, you don’t have to spin your own chain. So there’s a benefit, but the drawback is it’s quite expensive for any blocks to happen because you can think of it as [if] you need to rent a space on top of Polkadot,” Srinawakoon said.
BandChain is focused on multiple products outside of decentralized finance (DeFi) as well, Srinawakoon said, including stock and commodity prices, verifiable random number generation and sports betting, the firm said.