Since the inception of blockchain technology, the need for secure and reliable oracles has become increasingly apparent. These oracles connect real-world data to blockchain smart contracts, creating infinite possibilities for decentralized applications (dApps), and decentralized finance (DeFi) sectors. Two of the leading companies in the cross-chain oracle space are Band Protocol and Chainlink. In this article, we will look at Band Protocol vs. Chainlink and the differences and similarities between them.
Band Protocol
Band Protocol started as a project based in Thailand, founded in 2017 by three university friends, Soravit Suriyakarn, Paul Chonpimai, and Srinavakun Thaweesapphajorn. The company grew quickly and established a Singapore headquarters, developing partnerships with Coinbase, Binance, and other crypto exchanges. Band Protocol aims to bridge the gap between real data and blockchain applications, solving the reliability issue with the use of multiple validators, and decentralization.
Chainlink
Chainlink is an American-based company, founded in 2017, by Sergey Nazarov and Steve Ellis, with headquarters in San Francisco. Chainlink had been in the blockchain space earlier than Band Protocol, and had established a reputation for itself as a leading decentralized oracle solution, combining secure off-chain data institutions with blockchain smart contracts.
Both companies differ in their oracle solutions’ architecture, with Band Protocol utilizing band-oracles and having a high-speed data transfer solution, and Chainlink using a hybrid solution between on-chain and off-chain oracle solutions, for decentralized applications to communicate with real-world data providers. Both maintain a degree of flexibility in their oracle solutions but differ in their technological aspects.
Who are oracles and why are they needed
Oracles are providers of verified data for smart contracts from the outside world. Self-automated contracts can only operate with data from the blockchain. Therefore, the set of information that programs can use is limited. Oracles such as Band Protocol help to expand it.
For example, developers have created a decentralized crypto exchange. The trading platform needs to constantly “know” the current quotes of digital assets. To do this, the site needs to connect to a data provider. You can do this with the help of an oracle.
Differences
The main difference between Band Protocol vs. Chainlink is scalability. Band Protocol has a unique architecture solution enabling up to 20,000 transactions per second (TPS) and can be integrated across multiple networks, making Band Protocol applicable to almost any blockchain project. Chainlink, on the other hand, although is more popular, suffers scaling issues because of its dependence on Ethereum compatibility.
Band Protocol runs on Cosmos, and Chainlink runs on Ethereum. This is the main difference between the projects. The fact is that Ethereum is characterized by increased decentralization, which is good. At the same time, the blockchain regularly suffers from congestion, which leads to transaction delays and increased network fees.
In Ethereum, developers are forced to interact with an already overloaded mainnet. The severity of the problem was partially reduced by second-level solutions for ETH. The transition of Ethereum from a PoW to a PoS algorithm will also help to increase the scalability of the system. The changes are scheduled for autumn 2022.
Cosmos, unlike the BNB Chain of the Binance crypto exchange, is difficult to classify as competitors of Ethereum. As part of the creation of the blockchain, the developers were focused on solving other problems, for example, providing users with access to tools for customizing blockchains that will not depend on the main block chain. This approach reduces transaction costs and increases network throughput. At the same time, Cosmos solutions are inferior to Ethereum in terms of distribution.
The difference in the directions of work does not allow comparing the Cosmos and Ethereum blockchains. At the same time, it is important to note that in the context of the work of oracles, each of the projects has its own advantages. Band Protocol is cheaper and faster, Chainlink is more decentralized. At the same time, the transition of Ethereum to PoS may “outweigh” the scales in favor of Chainlink.
Another point worth noting is the number of partnerships each oracle solution had made. Since the launch of their architecture, Chainlink had partnered with Google, SWIFT, and Oracle. In comparison, Band Protocol had partnered with some of the leading cryptocurrency exchanges, such as Coinbase and Binance, as well as some DeFi projects such as DODO and Elrond.
Conclusion
In summary, both Chainlink and Band Protocol provide a great solution for blockchain-based oracles, each with its advantages and disadvantages. While Chainlink has one of the most credible reputations in the space, Band Protocol offers a scalable solution, enabling numerous transactions across multiple networks, making it more applicable to any blockchain project. Ultimately, the differences between Band Protocol vs. Chainlink reflect these companies’ unique approaches to solving the challenges of blockchain oracle solutions, thereby positioning the companies to carve out their own niches in a rapidly evolving industry.
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