What is Band Protocol? (BAND)

Who created Band Protocol?

Band Protocol is developed by an eponymous startup based in Thailand. It has three founders: Soravis Srinawakoon, who serves as chief executive officer; Sorawit Suriyakarn who is chief technology officer; and Paul Nattapatsiri who is chief product officer.

In 2019, Band Protocol raised $3 million from venture capital firms including the India unit of legendary investor Sequoia Capital. Later that year, it raised a further $5.85 million in an initial exchange offering (IEO).

The protocol had an initial supply of 100 million BAND tokens, 12.37% of which was sold during its token sale. Band has also conducted private token sales, raising $2 million this way. 

In total, over 27% of the BAND token supply has been sold to early investors. A further 25% of BAND tokens are reserved for the Band Protocol ecosystem and 22% has been set aside for the development team and the foundation that oversees development. 

Why does BAND have value?

Notably, the Band Protocol applies an inflation schedule to its BAND cryptocurrency, meaning that over time, the value of each BAND token gets reduced. 

The reason for this is to encourage users to deposit their coins with validators. When a user deposits coins with a validator, they earn tokens to offset the inflation rate. 

Band’s inflation rate ranges from 7% to 20%, and it fluctuates depending on the total amount of BAND deposited with validators. The target amount is to have two-thirds, or 66% of all BAND tokens, deposited with validators.  

Depositing coins with a validator is also known as staking, and users who stake BAND earn both newly minted tokens from the protocol as well as fees from applications that use its service. 

Additionally, BAND holders who stake their funds can enjoy bonus tokens from an ecosystem fund that rewards early users. The fund offers 3.16 million bonus tokens in the first year, down to 315,000 tokens in the fourth year. 

These mechanisms mean that Band Protocol rewards BAND holders for their participation in maintaining the system and ensuring that it’s delivering accurate external data to users. 

Why Should I Use BAND?

BAND may be of interest if you believe decentralized applications will continue to proliferate, and that these softwares will require data to be validated by other blockchains. 

You may want to use BAND if you wish to participate in the design of this system, as holding BAND means you can vote on proposals that affect the system’s rules. 

As demand for the system grows, such proposals could affect how much you earn with your tokens from staking BAND. 

However, Band Protocol is not the only decentralized oracle system that runs on a blockchain. Competitors like Chainlink are also popular and may put pressure on the price of BAND.