Smart contracts are great at providing immutable storage and verifiable transactions due to its deterministic nature. However, their use cases have previously been restricted due to the lack of access to information in the real world. This includes any data available on the traditional web, as well as those accessible through APIs.
When considering just how much of the apps and other tools we have available today depend on the data available off-chain, the problem becomes apparent. For example, in order to create a decentralized lending protocol on blockchain, the smart contract needs access to asset prices in order to calculate the collateral required for the position to stay healthy.
Since most of the trading activities happen off-chain on the centralized exchanges, smart contracts cannot acquire the trading price information without a 3rd party tool to relay them into the blockchain. Without such data, it is impossible to guarantee that all the funds are safe, and the borrowers won't lose money using the protocol.
Oracle solutions such as Band Protocol act as a middleware layer, operating between the decentralized applications and various data sources. Our task is to make sure that smart contracts have access to APIs and data sources outside of the blockchains.
For most decentralized applications, Oracle is arguably one of the most important components and fragile points of failure. That's why choosing a robust and decentralized oracle is one of the most critical decisions that application developers need to make. We believe that the best oracle solution must be resilient to any potential attack, and at the same time open and transparent on how all of its components are operated.
Band Protocol offers a decentralized oracle service that is secure by crypto-economics design, affordable, and easy-to-integrate for developers. Our solution is open sourced, audited, and operated by a wide array of professional node operators to make sure the oracle service we provide are adequately secure and robust for decentralized applications.
Band Oracles are currently securing multiple decentralized applications, both in decentralized finance (DeFi) space and other areas. Explore our flagship oracle solution - Band Standard Dataset - to learn more.