Soravis shared his thoughts on DeFi core values and told us how Band Protocol bring data available on-chain.

Hello! What’s your background, and what are you working on?

Hello guys, happy to be here with DeFi Prime to answer some of the burning questions crypto community have about Band Protocol.

My name is Soravis, CEO of Band Protocol (not to be confused with another Sorawit our CTO, and no we are not brothers). Quick background about myself, I have a Bachelor’s degree in Computer Science and a Master’s degree in Management Science, both from Stanford University. I spent two years at Boston Consulting Group, advising many C-level executives on their business strategy, ranging from how to double company revenues in two years to how to penetrate a monopoly market with a new product.

So while I was at Stanford, I had a chance to study cryptography class, and I found its mathematics very fascinating. Coincidentally, around 2014-2015, MIT conducted Bitcoin airdrop, so my co-founders and I became very interested. We went down the rabbit’s hole, since built one of the first crypto faucets with over 500,000 downloads, and started Band Protocol together a few years later.

At a high level, Band Protocol offers decentralized data oracle. Our protocol connects off-chain real-world data to smart contracts and decentralized applications. Current dApps have no easy way to gain access to real-world information, which is outside of the blockchain. Since data input essentially dictates the behavior of smart contracts, the data input has to be decentralized. Otherwise, it defeats the whole purpose of using a smart contract in the first place. It has been a critical flaw and big security loophole for many dApps.

What’s Band Protocol backstory?

When we first started two years ago, we tinkered around smart contract potential quite a lot. We try to build everything from lottery app (I love PowerBall, and I couldn’t play in Thailand) and gaming faucet to stablecoins. Every single time we came across the same problem - which is how to get real-world data to blockchain in a fully decentralized way. That has been a big, common issue for almost any dApps we want to create. Imagine trying to build decentralized Uber without location data. Hence, we pivot and focus on this problem since.

Our idea became much stronger when we observed an emerging trend in the crypto space, which is the current decentralized finance movement. Almost every single one of DeFi projects needs price oracle in some way. The two top DeFi projects MakerDAO and Compound are spending vast amounts of resources trying to build their own oracle. Oracles are still one of their more centralized components, which again introduces a potential security risk.

To me, this does not make any sense. DeFi should be concentrating on their core offering, e.g., how to optimize interest rate and bring real-world users to the platform rather than the price oracle component. If every dApps have to build their own Ethereum every single time, we will never get to any mass adoption. We think there is a need for a standard protocol to handle oracle in the most decentralized way. Decentralized oracles will enable much more comprehensive use cases, and many more dApps can then be built.

We were raising funds in one of the worst bear markets in crypto history. Luckily, we came across Sequoia, and we were impressed by their long term focus. We extensively discussed the size of the problem, our team background, our long term vision, and we finally got our first cheque from them. This allows us to bootstrap for another year and finally get to the launch of Band Protocol.

What went into building the Band Protocol?

It feels long and short at the same time. We spent almost two years of 9-9-6, going through nearly five or six iterations of our protocol, to get ourselves to where we are now. I’m proud of my team, both in terms of technical capability and their ability to persevere through ups and downs of the market. We are still in the early days, and the technology is very nascent, but we are excited to bring our solution to mainnet and eventually drive for mass adoption.

One thing we did well is behaving like real startups. We are very laser-focused on solving actual need and problem in the industry, while at the same time stay nimble and humble by taking in all the feedback. This feedback comes from our partners, crypto friends, and investors (especially from those that pass us! Always ask for their feedback). This feedback has been precious and has helped us gone through many iterations of our design.

Security is our number one priority. If there is a vulnerability in our protocol, this can potentially impact all dApps that are using us, which will be catastrophic. We have done extensive code audit and partnership with Certik, leading formal verification company that does code audit for many top crypto projects and companies.

What’s your business model and go-to-market strategy?

We believe data oracle is a HUGE space. All dApps from all blockchains will require access to real-world data for any meaningful applications (e.g., all defi depends on the price of eth right now). Given that smart contracts are as secure as the data input, the market size will be as big as the money at stake. Otherwise, it will be cheaper to attack.

Our token economic model ensures that our tokens capture the value of our decentralized network. We are not a payment token, but instead follow a ‘work token’ model where data providers and token holders stake tokens in order to perform work - that is, providing data to the blockchain. dApps who query data need to pay small query fee, similar to API fee. These fees are accrued within the protocol and distribute back to data providers and token holders proportionate to their staked tokens.

You can think of these tokens almost as paying dividends, not from thin air but actually, from the work token holders do to secure network (similar to miners in Bitcoin). So we can value our tokens using regular discounted cash flow model. If there are more data usages, there will be more revenues flowing through the protocol. Which ultimately feeds back to data providers and token holders who stake their token. We intend to stake most of our company’s tokens portion to earn part of the fee as our revenues, to ensure its sustainability. So we don’t just depend on the token’s price.

Our go-to-market focuses on two things:

Layer 1 solution partner: As you know, all Layer 1 solutions are also driving for traction. We partner with them to build data layer on top and go to market with them since they have a lot of resources and existing developer community. This partnership allows us to scale very quickly instead of going one dApp by dApp.
Geographically speaking, most defi now is in U.S. Asia has been lacking behind, but we are catching up. There are so many projects that are coming out in China, Korea, India, etc. We use our investor’s reach as well as our footprint to reach out to these new projects and help them build a better solution quickly.

It’s worth mentioning that even though there are many oracles, dApps are likely to use multiple solutions as well given the criticality of data integrity. For example, it’s doubtful that projects with over 500M collateralized loan will trust us or Chainlink alone - they will likely use multiple to cross-check data.

The industry is still relatively new and has the potential to grow with the smart contract and dApp adoption. I wouldn’t say there are any dominant players in terms of adoption yet. All dApps we speak to are quite open to try new solutions. This industry is still early and provides a lot of room to grow, so we are not too worried about competition.

What are the unique features that differentiate you from the competitors

There are a few important things that differentiate us from other solutions:

Speed & Ease of integration: We bring data available on-chain, thus whenever a smart contract needs access to data, it can do so as a simple function call. Simple and require no block confirmation delay. Many current solutions are asynchronous and require multiple blockchain confirmation before they can process data.
Economic Incentive: To provide data in Band Protocol, you need to stake tokens and your reputation as collateral. This is very crucial and very different from other solutions that may not have proper decentralized economic incentive at a protocol level. For example, current solutions have not implemented staking and there is no concrete plan from publicly available information. Furthermore, current solutions with smart contracts on the mainnet do not have a staking mechanism and dApps are required to choose data providers they trust themselves.
Cost & Scalability: Since data is published on-chain. Multiple dApps can consume the same data without incurring more costs to data providers. As the system grows, we expect the price of individual queries to go down.

What are your goals for the future?

Our long term vision is to become the go-to data oracle solution for all dApps. We need to onboard a good reputable set of data providers and dApps to start using our protocol. Upcoming months and weeks actually will be crucial to us. Mainnet is around the corner; several products are being planned so people can utilize and understand how Band Protocol fits into the ecosystem.

The biggest challenge is bootstrapping both dApps and data providers - that’s why we have tokens for the ecosystem that we are using to subsidize both sides. These will be used to stake for data providers as well as support initial query fees for the first dApps that we onboard.

What are your future thoughts for the DeFi market?

We believe decentralized finance has the potential to create a new financial system that is truly global, open, and transparent. What we have seen so far, mostly over-collateralized loans is barely scratching the surface. Over-collateralized loans are quite small in traditional finance, and we think the bigger pies. The ones we are more bullish on, are bringing a more traditional financial product to blockchain and offering these solutions to the mass who previously has no easy access to good financial system. This will be truly game-changing.

Where can we go to learn more?

Official BAND communication channels:

Synthetic Assets in DeFi: Use Cases & Opportunities

While the primary use-case for cryptoassets continues to be speculation, I don’t believe this is a bad thing. Speculation was a key driver in the development of traditional financial markets and continues to play an important role in the industry today. Most importantly, speculators provide liquidity, allowing participants to enter or exit the market more easily. This reduces transaction costs and increases access for market participants.

DeFi Accounting

DeFi Accounting Series:
Part 1: Decentralized Autonomous Organization Accounting
Part 2: Crypto Lending & Borrowing Platforms

The notion of HODLing is rooted in the idea that assets should be held onto because chances are the price of the assets will increase. We know thought that cryptocurrency prices don’t always go up because of inherent value.

Staking

PoS networks use validators who create, propose, or vote on blocks added to the blockchain. From the customer point of view, Staking is similar to interest savings account in a traditional bank. In DeFi, infrastructure service providers such as staking pools and Staking-as-a-Service providers play the role of the bank, running nodes for decentralized PoS protocols on behalf of investors.

KYC & Identity

KYC is an abbreviation for Know Your Customer refers to government regulations designed to prevent money laundering, financing terrorism and other crimes involving money. It also refers to the policies, procedures, and technology used by banks and financial services companies to comply with KYC regulations.

Tokenization of Assets

Through tokenization, investing is cheaper, faster, more secure and available every hour of the day. This opens up real-world assets and the world of cryptocurrencies to people who previously may not have been able to invest due to geographic or financial restrictions, and offers an alternative to traditional and largely outdated investment methods.

Asset Management Tools

Custodian it is a specialized financial institution responsible for safeguarding a firm’s or individual’s financial assets and is not engaged in “traditional” commercial or consumer/retail banking. Custodian services in DeFi it is wallets, apps, and dashboards for managing your cryptocurrencies and assets.

Bitcoin DeFi ecosystem

DeFi is the movement that leverages decentralized networks to transform old financial products into trustless and transparent protocols that run without intermediaries. We have 203 DeFi projects listed and 24 of them using Bitcoin.

Assets Management Tools

Abra

Abra is a non-custodial multi-coin wallet with built-in cryptocurrency exchange.

Bitpie

Bitpie is an multi-blockchain mobile wallet. Bitpie enables users to transact and use DApps while holding assets totally under their control.

Button wallet

Button is a cross-platform Telegram based cryptocurrency wallet. Interview with Rachael McCrary, COO of Button Wallet.

Eidoo

Eidoo gives access to a full range of features and financial services fully compliant, which are safe and easy to use via the Eidoo app, including a non-custodial Wallet, a Hybrid Exchange and a platform to participate and launch token sales.

Enjin Crypto Wallet

Enjin is a mobile cryptocurrency wallet with dApp browser, supporting Ethereum, Bitcoin, Litecoin, ERC20, ERC721 AND ERC1155 tokens.

Huobi Wallet

Huobi Wallet is a multi-currency wallet featuring cross-chain exchange of mainstream coins, dApps browser, and staking as a service for PoS networks.

Infinito Wallet

Infinito Wallet is a mobile multi-currency wallet with dApps browser for interacting with the DeFi ecosystem.

BTC Decentralized Exchanges

Atomex

Atomex allows users to securely and anonymously exchange Bitcoin, Ethereum, and Tezos via its own desktop wallet and also provides low-level APIs for integration.

Bisq

Bisq is an open-source, peer-to-peer desktop application that allows you to buy and sell cryptocurrencies.

Liquality

Liquality is an interface that offers the secure way to swap cryptocurrencies between BTC, DAI, and ETH with minimal risk and fees, while maintaining control over your private keys.

Sparkswap

Sparkswap is the cryptocurrency exchange built on the Lightning Network.

Bitcoin Crypto Lending

BlockFi

The BlockFi lets you put your crypto to work and earn monthly interest payments in the asset-type that you deposit with BlockFi.

CoinLoan

P2P lending platform for cryptoassets backed loans.

Constant

The Constant P2P lending algorithm matches investors with borrowers glad to pay their rates.

ETHlend

ETHLend is a decentralized peer to peer lending marketplace. Users can put a loan request or a loan offer choosing their preferred conditions, and the platform allows them to match. Everything is regulated through Smart Contracts. Interview with Stani Kulechov, founder of ETHLend.

Nexo

Nexo is a fully operational instant lending platform with seamless user experience and military-grade security with 256-bit encryption. The Nexo Wallet allows crypto holders to both earn daily interest on their idle crypto assets or to get instant access to cash without selling their cryptocurrencies. All client funds held in custody are insured by the Lloyds of London.

SODA

SODA is a DAO for lending and borrowing crypto-assets. You can borrow DAI within 15 minutes with a fixed rate using Bitcoin (BTC) as a collateral. SODA: BTC-backed Crypto Loans. Interview with co-founder, Max Tarasenko.

SALT

A lending and borrowing platform that allows users to leverage their crypto-assets to secure loans.

DeFi Infrastructure & Dev Tooling

Carbon Fiber

Carbon is an all-in-one fiat-to-crypto on-ramp API to help you retain new customers effortlessly, so you can focus on building. Carbon Fiber: Stripe for Crypto. Interview with Nick Pai, Lead Software Engineer at Carbon.

MoonPay

MoonPay is a fiat on-ramp that enables web and mobile developers to let their users purchase virtual currencies using credit card.

RSK

RSK is the open sources smart contract platform secured by the Bitcoin Network.

BTC Payments Solutions and Service Providers

Lightning Network

Lightning Network is a decentralized network using smart contract functionality in the blockchain to enable instant payments across a network of participants.

Marketplaces

OpenBazaar

OpenBazaar it’s a peer to peer application that doesn’t require middlemen, which means no fees & no restrictions.