Band Protocol gets Binance market data, reveals OpenAPI functionality
Knowledge is power, especially when it's being used to trigger smart contracts.
Two big, and related, things have just happened to Band Protocol.
One is that it now has access to another 600+ pieces of data, in the form of price feeds from Binance's markets.
The other big development is that it's revealed its OpenAPI call spec functionality. This means Band Protocol smart contracts can now directly tap into any open API data sources on the web.
To understand the implications of this, it's worth first stepping back and looking at what Band Protocol actually is.
Band Protocol is a decentralised oracle system, whose functions invite inevitable comparisons with Chainlink, which similarly tapped into Binance late last month.
What decentralised oracles do, in a nutshell, is serve "clean" data to other applications.
For example, if you want to create a smart contract that executes when Bitcoin prices hit $10,000, you need to have some kind of source of information (an "oracle") that tells the contract when Bitcoin hits $10,000. But for it to be reliable, you need to make sure the data source is good.
If you only use Bitcoin prices from one exchange, a flash crash or big buy order, or some other deliberate or accidental manipulation, could prematurely trigger the contract. And if you rely on a single third party to provide the data, you can't trust the data.
What Chainlink does is it pulls data from multiple sources and ensures it's clean. It does this by decentralising the collection and reporting of this data, by using
magic blockchain pixie dust a token model that incentivises the majority of participants to accurately report data to the wider network. The end result is a stream of data that's theoretically perfectly reliable.
The reason this is so important is because a smart contract is only as reliable as the data it receives, and smart contracts are quite useless if they aren't reliable. Decentralised oracles are the difference between smart contracts and dumb contracts.
The end result for Chainlink looks like this. And the end result for Band Protocol looks like this. You'll notice that the two appear to be the same thing in some ways, but they're also quite different.
Chainlink leans more towards providing uber-reliable data streams of clean, refreshing aggregate data. By contrast Band Protocol is more geared towards letting developers and their smart contracts flexibly pick out data on demand from a wide range of sources.
Consequently, even though both Band Protocol and Chainlink are now decentralised data oracles of a sort, and both of them can now pull data from Binance markets, you can do different things with each.
For example, it presents a new way of performing reliable cross-chain swaps.
"Until now, it was not possible for an individual to buy BNB on Binance Chain using ETH on the Ethereum blockchain without relying on a single point of trust," explains Band Protocol CEO and co-founder Soravis Srinawakoon. "We're pleased that with Band Protocol, users can safely coordinate on-chain between the buyer and the seller with trustworthy data."
The reason this is possible is because Band Protocol smart contracts can now call a specific address on Binance Chain and a specific address on the Ethereum blockchain and use the data from those sources to carry out a smart contract swap.
By combining this new functionality with the new addition of 600+ new data sets from Binance, you have an entirely new way for third-party developers and smart contracts to interact with the Binance market.
"We are excited to work with Binance to make the promise of DeFi a reality through our OpenAPI. This enables anyone to create decentralised applications that can use Binance’s 600+ crypto data which is a great source of price discovery. What’s most exciting is that this will open doors for more finance and enterprise use cases to come as our platform can connect to any available API online," Srinawakoon adds.
Elsewhere in the world, there are countless more applications for this type of system, and it all begins with good data. Knowledge really is power.
Disclosure: The author holds BNB, BTC at the time of writing.