A Deeper Look: Zap Protocol and Band Protocol

In the oracle space, it is not just a ‘versus’ type of game, but also a ‘rising tide lifts all boats’ type of game. We are early in the era of oracles powering decentralized applications, and the perfect solution arguably doesn’t exist yet. We can learn from each other and grow stronger together.

Interestingly, Zap Protocol and Band Protocol share some striking similarities. Comparing their core components, we observe similar language:

  • Oracles
  • Token-curated data
  • Community-curated data providers
  • Dual-token economics
  • Bonding curves

It is important to note Band Protocol claims to be the worlds’ first community-curated oracle solution. This is false as Zap Protocol launched 10 months prior, on Jan. 1st 2019.

In fact, Zap became the first ever decentralized oracle platform, and arguably the first bonding curve implementation. A term coined by the Zap team

But, as much as there are similarities, there are differences in execution too. Below, we briefly discuss three of the most notable deviations.

1) Community-Curated Data

On both protocols, data providers are ‘curated’ by the community. Herein, users ‘stake’ or ‘bond’ value to a data provider they deem valuable. This works as an incentive for the data provider to remain honest and maintain the highest quality standard, as it collects more money.

With Band Protocol, however, this metric also dictates which data provider you need to use, as it automatically selects the wealthiest providers. Zap Protocol doesn’t force you to trust anyone, as you are free to select any provider you like and only use community curation as a tool.

Additionally, auto-forcing the wealthiest providers may cause (too) high entry barriers for new providers, killing off competition and potentially leading to centralization.

2) Dual-Token Economics

Band Protocols’ ‘Dataset Tokens’ are Zap Protocols’ ‘dots’. These are the internal oracle currencies that your staked $BAND or $ZAP serve as collateral for. These allow each dataset to be curated seperately. Other than this, however, these internal currencies have no use.

Zap Protocol allows you to replace this otherwise useless internal currency with regular ERC20 tokens, which can be traded on exchanges and stored in wallets. This opens up usecases such as decentralized autonomous organizations, token launch events or stablecoins, out of the box.

Furthermore, these ERC20 tokens can be time-released through pre-set conditions, triggered by the protocols’ programmable smart contract business logic and verified by its native oracles.

3) Fee Distribution

On the Band Protocol, each user that has value staked to a data provider, receives a share of the fee collected when data is sold. This would logically mean that the more users stake, the higher the fee becomes for the data buyer. If not, the data provider would eventually generate a near-zero revenue stream.

This model could potentially make Band Protocol oracles expensive to use. On the Zap Protocol, there is no baked-in fee distribution over staked users. It seems logical this should result in less expensive oracles. Anyone is free to design their own oracle templates, however, and so we could see experimentation with these incentives on Zap Protocol in the future.

A ‘Master Bonding Curve’ is currently in development, however, that pools the protocols’ fees and distributes it over all users that bond value to it.

Please note: This is an opinion piece by community members. Thank you for reading!

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Crypto projects & topics of interest in a non-technical way. Author Twitter: @dave_jonez_02 & @3mperat0r.

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Dave Jones

Dave Jones

Crypto projects & topics of interest in a non-technical way. Author Twitter: @dave_jonez_02 & @3mperat0r.

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