In this regard, two of the prominent gainers were Band Protocol (BAND) and Chainlink (LINK) as both of them skyrocketed by 348% and 88%, respectively in the past ten days. Both blockchains function as an oracle network providing data to DeFi (decentralized finance) applications.
Since the beginning of this month, cost of BAND increased from $3.90 to a high of $17.78, while the cost of LINK jumped from $7.60 to $14.45.
The main criteria backing the robust uptrend are the exponential growth of DeFi domain. DeFi apps permit users to conduct several financial operations like credits, trading and even generating interest from cryptocurrency lending.
For DeFi platforms to function without any issues, they need to receive market data from multiple websites and blockchain networks. This is precisely facilitated by oracles, which are used by smart contracts to draw necessary data for smooth functioning of DeFi platforms. Consequently, when the DeFi industry grows, oracles which act as their core gain as well.
A TradeBlock academic report details as follows:
“Oracles allow for off-chain data to be integrated with the smart contract parameters that exist on public blockchains. In the figure below, we compare price gains between ChainLink (LINK) and Band Protocol (BAND) over the past three months.”
Defi Pulse data indicates that since June 1, the overall value invested via DeFi apps jumped from $1.048 billion to $4.76 billion. As more capital came into the DeFi market, the need for oracles also rose at a faster rate.
The key distinction between both covenants is that Band Protocol is premised on Cosmos, while the latter runs on Ethereum network. Cosmos blockchain uses a PoS (Proof-of-Stake) protocol, while Ethereum core programmers are working to shift it to PoS through ETH 2.0 update.
$BAND has recently taken a page straight out of the $LINK handbook with a slew of partnership and integration announcements, including a Coinbase Pro listing.
Up over 32x on the year, its relative valuation play and anchor to LINK has worked so far. pic.twitter.com/oC3cGaHRu0
— Messari (@MessariCrypto) August 10, 2020
BAND token has significantly appreciated, compared with Chainlink over the last few weeks due to a huge disparity in valuation. Of late, LINK commands a value of more than $4 billion, whereas BAND is worth $308 million, despite the 348% appreciation in price. Academics at Messari opined that BAND has taken a route comparable with that of Chainlink, leading to a sharp appreciation. They explained as follows:
“BAND has recently taken a page straight out of the LINK handbook with a slew of partnership and integration announcements, including a Coinbase Pro listing. Up over 32x on the year, its relative valuation play and anchor to LINK has worked so far.”
Kelvin Koh, co-founder of Asia-based venture capital company Spartan Black stated that he anticipates BAND to rally further. In the next 12 months, Koh expects BAND to fill the valuation gap. He stated:
“Despite BAND’s significant re-rating YTD, it is worth noting that its circulating market cap is still only 5% of LINK’s while FD market cap is 10%. This is fair currently given BAND’s nascent stage but I expect the valuation gap will continue to close in the next 12 months as BAND scales.”
0/ Despite BAND’s significant re-rating YTD, it is worth noting that its circ mkt cap is still only 5% of LINK’s while FD mkt cap is 10%.
This is fair currently given BAND’s nascent stage but I expect the valuation gap will continue to close in the next 12 months as BAND scales
— SpartanBlack (@SpartanBlack_1) August 8, 2020
As LINK and BAND are hosted on different blockchains, they will probably support distinct DeFi apps based on Cosmos and Ethereum.