De-fis Step Into the Spotlight

As reported by CoinTelegraph,

This week Bitcoin (BTC) price is making waves as the digital asset finally pushed above the $12K mark, but prior to this move, altcoins have been strongly outpeforming BTC for weeks. Two of the most notable performers are Band Protocol (BAND) and Chainlink (LINK) as both surged by 348% and 88% in the past ten days. Each functions as an oracle blockchain network that supplies data to Decentralized Finance (DeFi) applications.

Since the start of August, BAND price rose from $3.9 to as high as $17.78 and in the same period, LINK surged from $7.6 to $14.45 at its peak on Aug 10. BAND and LINK performances side by side

What’s behind the DeFi token pump?
The primary factor behind the strong rally is the explosive growth of the DeFi sector.

DeFi applications allow users to carry out various financial activities like trading, loans, and also earning interest from crypto lending.

In order for DeFi platforms to run seamlessly, they need to fetch market data from various websites and blockchain networks and this is where orcacles come into use. Oracles are required within smart contracts to obtain necessary data to run DeFi platforms. Hence, when the DeFi sector expands, the blockchain networks providing oracles benefit from i

A TradeBlock research paper explains:

“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.”

Data from Defi Pulse shows that since June 1, the total value locked in DeFi apps surged from $1.048 billion to $4.76 billion. As more capital has entered the DeFi market, the demand for oracles also increased.

The main difference between Band Protocol and Chainlink is that the former is based on Cosmos, and the latter operates on top of the Ethereum network. Cosmos is a proof-of-stake (PoS) blockchain, while Ethereum is in the process of moving over to PoS through ETH 2.0.

BAND has seen substantially larger gains than Chainlink over the past several weeks due to a large gap in valuation. Currently, LINK is valued at over $4 billion, whereas, BAND is valued at $308 million despite its 348% gain.