BandChain Phase 2: How to Earn as a Premium Data Provider

Catherine
Catherine
Jun 11 · 6 min read

BandChain Phase 2 consists of the streaming-revenue feature that allows on-chain and real-time payment for data directly to premium data providers. This opens up many new possible use cases that lead to more secure and richer data ecosystems, prompting Band Protocol to sustainably serve the maturing DeFi and cross-chain landscape.

As a provider, to enable revenue streaming, you will need a Band address, a configured data source account which you will have full control of the fees and payment, and a server that interacts with Band Protocol’s infrastructure and the data provider’s API.

Expanding Data Coverage For Next-Generation DApps

One of the missions for Band Protocol is to innovate for a healthy decentralized ecosystem through reliable and secure data. Recently we discussed the features and improvement of Bandchain Phase 2 (Laozi), which includes:

1. Streaming Revenue Feature for Data Providers

2. Cross-Chain Feature: Inter-Blockchain Communication Protocol (IBC protocol)

3. Throughput Optimization (8x Increase in Requests Per Block)

In this article, we’ll be breaking down how premium data providers can participate in the BandChain Phase 2 Testnet and later in production.

Defining Data Providers

A data provider is an entity (business, institution, project, or established entity) that provides data on Band Protocol in exchange for query fees. Typically, data providers have existing data APIs that require payment to authorize access to their data and are widely used by applications both on Web 2 and 3.

In BandChain Phase 2, a data provider can choose to accept fees on-chain directly from a requester in real-time — streaming revenue which scales in multiples as more decentralized applications query the premium oracle script. We will refer to a data provider who participates in this manner as a premium data provider in this article.

Streaming Revenue For Premium Data Providers

When a user (for example, a DApp) requests data on BandChain, it can specify the desired data feeds for aggregation, the minimum number of validators, and from what premium data sources (such as CoinMarketcap, Coingecko, Brave New Coin, CryptoCompare among others). When sending the requests, the user would also pay the fees in BAND token directly along with the request. The fee then automatically goes to the specified data source’s BAND wallet on BandChain in real-time.

The benefit that premium data providers enjoy are:

  1. No lock-up period. No settlement. Everything is paid in real-time. There is no need to wait till the end of the month to settle.
  2. Full control over your revenue. The revenue goes directly to the provider’s BAND wallet as requests happen.

A Step Forward For A Secure and Rich Decentralized Applications Ecosystem.

We are committed to our mission to grow with the DeFi industry and the future of cross-chain communication. Collecting fees on-chain in real-time allows for:

  1. More decentralized infrastructure and more security. The fees go directly to data providers’ wallets which they have full control over. For data providers, this means no lock-up of funds by the third-party escrow service. Less reliant on a centralized entity to avoid single points of failure and more secure DApps.
  2. Free data market. With the infrastructure of BandChain that is based on decentralized proof of stake consensus, anyone can buy or sell any data on the internet freely with no authority oversight from the platform.
  3. Rich data ecosystem. The aforementioned points incentivize and allow for anyone to step in and become a data provider. This includes traditional data companies and DApps to commercialize and monetize their intellectual property or data solutions. More revenue liquidity with a permissionless setup lowers the barrier of entry for any entity to become a data provider. Having more data providers leads to various types of data on the BAND data market, integration-ready for the wider blockchain ecosystem.

To see more use-cases, check out our previous deep dive.

Dataflow in BandChain Phase 2 (Laozi)

BandChain’s highly scalable infrastructure allows for the addition of this streaming revenue feature and many other possibilities in the future. Below is a walkthrough of how the streaming revenue features work seamlessly with BandChain infrastructure while keeping its integrity as a decentralized, permissionless, and secure data solution.

  1. A requester (in this case, a Decentralized Application) sends a data request to BandChain. This request specifies criteria such as the data feed, data sources, the minimum and desired number of validators.
  2. A randomized sample of validators based on stake-weight, will take the request with a signature that comes from BandChain, submit that request with the attached signature to the Data Source’s BandChain Gateway server. This server is run and maintained by the data provider and acts as a unit to interact with BandChain and its own data center.
  3. The Data Source’s BandChain Gateway Server then checks the signature with the BandChain endpoint. This is to make sure that the request does come from BandChain — implying that the request is valid.
  4. BandChain endpoint replies with the result of signature verification.
  5. If the signature is valid, the Data Source’s BandChain Gateway Server connects with its own data center’s API to retrieve the requested data.
  6. The data is handed back to the Gateway Server.
  7. The Gateway Server hands back data to Validator.
  8. BandChain reports data back to the requester.

All the steps ensure that the data solutions by BandChain are trustless, permissionless, secure, and truly decentralized. While these steps ensure that the data is tamper-proof, we are able to provide this feature without compromises in our security, block time, report time, and other performance metrics with the recent improvements and gas optimizations on BandChain.

Becoming a Premium Data Provider

This feature will become available in BandChain Phase 2.

Given that you have an API endpoint infrastructure that allows access to the data that you want to provide, here are the steps to become a data provider on Bandchain.

Step 1 — Setup BAND wallet address.
This can be done through Cosmostation Wallet or your Ledger.

Step 2 — Configure your Data Provider’s account
This step requires you to create a ‘data source’ account on BandChain and specify parameters that help you collect fees and relay data. For example:

  • Data Source Name and Description
  • Treasury Address: the address where data charges go to
  • Fee: how much fees to collect per each transaction
  • Owner: the address that can modify the data source configuration
  • From: transaction signer

Step 3— Setting up your BandChain Gateway Server
In order to interact with BandChain to receive and fulfill requests, a premium data provider sets up and maintains their own BandChain Gateway Server which runs software logic that interacts with BandChain Infrastructure and the data provider’s own data API infrastructure. The simple setup is walked-through in collaboration with the Band Protocol team. The Gateway Server performs the following functions:

  1. Receive requests from BandChain validators.
  2. Verify with BandChain if the said request from the validators has been submitted to BandChain. This provides another security measure to prevent a malicious actor from gaining access to the data for free.
  3. Send a request to an API server if the request is verified, and relay the data to the validator.

Interested in becoming a data provider, or looking to look into an example of an implementation of the BandChain Gateway Server with step-by-step command line and verification logic — please reach out to us for a demo at dev@bandprotocol.com

We will be publishing a document with detailed examples of implementation for the public on our GitHub before our main net launch in a few weeks.

For more updates about our upcoming updates, please follow us on one of our social media channels below.

(We are hiring!)

About Band Protocol
Band Protocol is a cross-chain data oracle platform that aggregates and connects real-world data and APIs to smart contracts. Band Protocol enables smart contract applications such as DeFi, prediction markets, and games to be built on-chain without relying on the single point of failure of a centralized oracle. Band Protocol is backed by a strong network of stakeholders including Sequoia Capital, one of the top venture capital firms in the world, and the leading cryptocurrency exchange, Binance.

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Band Protocol

Secure, Scalable, Cross-chain Decentralized Oracle for Web 3.0