Band Protocol — A Protocol for Decentralized Data Governance
Introducing an open standard for the decentralized management of data
It has been exactly one year since we first introduce Band Protocol in our original blog post. Since then, we have been putting our heads down to design and launch our protocol for real-world adoption. We have also received many valuable feedback from both decentralized communities and centralized enterprises who seek to utilize our solution. Aiming to make our protocol as robust and useful as possible, we incorporate these feedback and grow Band Protocol to meet the requirement of end users.
Our core value proposition is still the same: providing trusted and reliable data to the open internet. What have changed is the design of our protocol to add more curation method, beyond simple token-curated registry, to make sure we can tackle all sort of data including both objective and subjective data. We have recently launched our testnet and believe this is a good time to recap what problem we are solving and the path going forward.
Band is a standard protocol to govern and manage data
Band is an open protocol that facilitates the governance of data used in decentralized blockchain systems. The protocol functions as an open standard for data handling and management for any decentralized program or application that requires trusted and reliable data.
Decentralized systems need availability to data
All blockchain platforms in existence that operate and execute code ‘trustlessly’ in smart contracts suffer from the same centralizing issues that arise when needing to use external data points. Many decentralized systems rely on being able to perform basic tasks and computations that require external data feed points such as price feeds, inter-chain communications, real-world events and external web API interactions.
Essentially, smart contracts cannot access data by themselves — there is no simple and intuitive query interface for decentralized applications to receive real-world data. Until decentralized applications can interface real-world external data inputs into simple function calls there will be significant barriers in adoption of the technology and the accessibility for developers to realize new applications.
Existing data availability solutions for blockchain smart contracts either depend on highly critical central points of failure or are subject to asynchronous interactions which causes delays and complicates the smart contract logic execution.
The need for trusted and reliable data
In the permissionless environments of decentralized systems the economic incentive and temptation to corrupt and attack critical data sources of a systems operation can be significant. Without strong incentive mechanisms to ensure high quality and reliable data provision, decentralized systems and applications will persistently suffer from these security risks.
For example, if an external data source provided by an ‘oracle’ controls the data inputs to a smart contract, then it has the ability to determine the response and behavior of that smart contract. Essentially the data source controls that smart contract — if the oracle is compromised then so is the smart contract and all the systems depending on it, creating a significantly weak point in the security and censorship resistance characteristics of blockchains.
For decentralized applications to continue to be able to become increasingly sophisticated and useful, they must be able to use and replicate equivalent tools used in centralized settings for their decentralized system counterparts. Ultimately enabling developers to build the decentralized applications of tomorrow that will improve people’s lives.
Data governance: smart contract component layer solution
Band Protocol is a Web 3.0 component layer solution for managing data that resolves the data availability and reliability problem for blockchains. DApps using Band Protocol consume data via BAND public smart contract data points rather than through oracles that are external to the blockchain the dApp is built on. BAND data feeds are community-curated data sources, providing a framework for dApp users and developers alike to self moderate, curate and manage the data sources such that they can be trusted and reliable for their intended purposes.
By creating a standard framework for the community governance of data, Band can create a socially scalable method for the widespread adoption and integration of trusted data that all dApps can utilize.
Band data interfaces are source and application agnostic, meaning that can be applied for any purpose that the community curating the data deems fit. Sources can be aggregated using mean, median or mode and can be sourced from multiple sources such as centralized external feeds or aggregated smart contract data.
Most importantly Band does not define how the data is treated, rather it provides the means for a community to collectively decide how it will be used and curated. No assumptions are made as to how the data should be curated and treated by Band, this power is placed entirely in the hands of the community that wishes to use that data for their decentralized application, creating optimally incentivized participants that align with a common goal of creating a reliable data source for their decentralized applications.
Band Protocol Use Cases and Applications
Band Protocol provides solutions and products for decentralized data governance in four key areas:
1. Data Valuation & Price Discovery — Dataset Tokens & Issuance with bonding curves
The tokenization of datasets is necessary for the correct incentive mechanisms to be realized for effective protocol operation. In the permission-less environment of Web3.0, participants performing work must receive direct economic benefits (such as token payments) in order for the system to operate effectively and for participants to not act maliciously.
Dataset tokens are issued and valued for each associated dataset and give the ability for an incentive mechanism to be tied to the specific mechanics of that particular dataset. It also gives the opportunity for new business models to emerge where users retain control and sovereignty over their data.
Bonding curves (similar to the structure of UniSwap and Bancor) are used to issue the Dataset tokens such that there will always be liquidity and availability for use of these tokens and hence maintain continuous effective operation of the protocol.
2. Delegated Curation — Management of data feeds and oracles
DApps cannot directly access trusted data for their dApp to work. Without access to external data and APIs the use cases for DApps are very limited.
Existing data feed solutions such as oracles are either very centralized with critical single points of failure or are very nascent, inefficient and developer unfriendly such as prediction markets which presently are too illiquid to be practical to meet a DApp developers needs. For example many decentralized finance and betting applications suffer in their security models due to their need to access to price feed and external event data.
Band Protocol provides a standard framework for users and developers of these DApps to manage the access to data sources and incentivise their correct usage resulting in more robust and usable DApps.
In this framework the responsibility of providing and curating data is delegated to elected top data providers. These top data providers are governed by the Band Token holders, allowing them to remove underperforming providers to ensure optimal operation. An elected data provider stakes dataset tokens along with other token holders who stake on their behalf, and collects rewards in the form of the fees paid by the dApps that consume the provided data.
3. Direct Curation — Token Curated Registries
Centralized information providers are more susceptible to corruption and malicious behaviour without appropriate checks and balances.
Direct curation through token curated registries provides a more reliable and transparent way for data to be organized and managed for a particular group wishing to use that particular data source, with incentives to ensure their correct management.
Band Protocol will be building community-curated blockchain content platform, CoinHatcher, that focuses on providing accurate cryptocurrency price, volume, news and research data.
4. Private Data Governance — Information Sharing & Decentralized Reputation Standards
A major factor limiting enterprise participation in the public blockchain ecosystem is the lack of a means for companies to share data securely and privately in a decentralized system. This results in data remaining highly siloed and forces many to resort to more permissioned blockchain solutions.
Band will build a private information sharing solution for decentralized technology with a focus on identity management, reputation systems, credit scoring and supply chain.
Band Protocol design now encompasses more robust method to govern, manage and curate trusted data, which can accommodate more use cases as we move toward mass adoption. In future blog posts, we will elaborate more on the above mechanics, their specific use cases, and their limitations. For more technical detail, check out our new whitepaper.
Currently there is documentation and tools available now for developers to build and deploy their own token curated dataset on testnet. We also have sample applications: data feed and CoinHatcher beta version available on testnet.
We are excited to keep you up to date on our development and will be providing further updates on our products and data feed soon. We ask you to join us in building the data governance framework for Web 3.0 as we strive for a decentralized future and if you have any questions please feel free to ask us!
Soravis Srinawakoon, CEO Band Protocol
About Band Protocol
Band Protocol is a protocol for decentralized data governance. It operates as an open-source standard and framework for the decentralized management of data. Build and manage off-chain oracles, reputation scores, identity management systems, token issuances and token curated registries.