API3: Democratizing Information with Decentralized APIs


API3 is a Web 3.0 portal that integrates APIs and real-time data sources.

Summary

In order to build effective decentralized apps, platforms, and marketplaces, reliable external data must be sent to on-chain environments. API3’s dAPIs (decentralized APIs) enable smart contracts, dApps, and blockchain-based applications to access real-world data from existing oracle API providers.

Decentralized APIs can be used to connect to almost any blockchain and serve as a multi-layer, cross-platform oracle for giving data to any decentralized ecosystem that requires it.

Contents

Introduction to API3 and Web 3.0

API3 is a platform that allows blockchain-based decentralized apps (dApps) to access blockchain-external, real-world data and services via application programming interfaces. APIs are a well-established standard in the software and app development industry.

API3 enables the world’s data to be fed into blockchain applications with the convenience and uniformity that API connection provides.

When creating new programs or applications, developers frequently use existing APIs to port specific datasets or services into a new project without having to start from scratch. An API, for example, may be used by a weather app on your phone to get recent data regarding real-time weather conditions.

APIs are the foundation of many of the modern programs and software that we use on a daily basis.

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Most APIs are developed for the traditional environment of centralized applications, data, and financial services, and are not naturally compatible with the world of blockchain and dApps, which is a problem that API3 intends to fix. API3’s goal is to make current APIs compatible with Web 3.0’s decentralization standards while minimizing the load on API providers and dApp developers.

Decentralized APIs: Connecting Decentralized Networks

API3 has created its own decentralized APIs in order to decentralize the process of transferring off-chain data to the on-chain environment (dAPIs).

These are completely decentralized APIs that are built to work with blockchain technology and don’t require the usage of proprietary technology or access from a rent-seeking gatekeeper.

Decentralized APIs can be used to connect to any blockchain and serve as a multi-layer, cross-platform oracle for giving data to any decentralized ecosystem that requires it. Because many platforms benefit from dependable data oracles, API3’s decision to remain blockchain-agnostic allows it to function with virtually any decentralized network with smart contract capabilities.

API3 dAPIs collect data directly from first-party data providers, a specification that improves openness, reduces the possibility of third-party data manipulation, and eliminates the need for rent-seeking middlemen, placing more money in API providers’ hands. 

API3 distinguishes itself from other blockchain data oracle efforts, such as Chainlink, which frequently employ their own nodes as intermediaries to send data from external APIs to requesting smart contracts.

Airnode and First-Party Oracles

API3 uses first-party oracle nodes, which are run directly by data suppliers, as opposed to most other Oracle initiatives, which use third-party oracle nodes hosted via an intermediary.

API3 accomplishes this by utilizing Airnode, a technology that allows API providers to convert their APIs into dAPIs. Airnode decentralizes data feeds at their origins, removing the need for intermediary nodes and allowing dApps direct access to data. Airnode is a serverless oracle node that API providers can deploy quickly and easily without the need for ongoing maintenance.

As a result, Airnode makes it simple for Oracle API providers to monetize their data feeds in the decentralized world.

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The goal of API3’s Airnode project is to make the process of becoming a first-party oracle node for API providers as simple and painless as possible. Airnode is designed to be a set-and-forget deployment that doesn’t require any overly technical knowledge to deploy.

Airnode also doesn’t require API providers to accept cryptocurrency as a form of payment and uses on-demand pricing, which means oracle API providers won’t have to pay for hosting when their API isn’t in use.

Decentralized Governance and the API3 Token

The API3 decentralized autonomous organization (DAO) is in charge of maintaining API3 dAPIs and providing decentralized governance all the way down to the project’s basic structure. dAPIs can be administered with more transparency and less risks of centralized points of failure because to decentralized governance.

The API3 DAO is in charge of both individual dAPIs on the platform and the overall API3 project. The API3 DAO is responsible for the construction, setup, management, and monetization of dAPIs, as well as the operational costs of dAPIs, such as gas fees and oracle API provider payments.

Nuanced incentive structures incorporating governance, staking, and insurance have been implemented in order for the API3 DAO to function efficiently.

The API3 token is API3’s native utility token and the API3 DAO’s central payment and community governance mechanism. dApps that use the dAPI network will pay a membership fee in API3, while API providers using Airnode can accept payment in fiat via an API3 DAO grant if they don’t want to deal with cryptocurrency.

Staking API3 tokens under the API3 insurance staking contract allows all community stakeholders to directly engage in community governance. 

Stake rewards and inflationary incentives are earned as a result, and stakeholders are monetarily rewarded for participating in the decentralized network and increasing its overall worth.

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The Future of API3’s Oracle API Gateway

In order to build effective decentralized apps, platforms, and marketplaces, reliable external data must be sent to on-chain settings.

API3’s oracle API gateway is designed to make this process as simple as possible for API providers. API3 offers to put more cash in the hands of data providers by minimizing the role of middlemen and making it easy for them to operate their own nodes, a scenario that may drive even more providers to adopt and participate in the decentralized landscape.

API3’s approach to becoming a competitive data oracle solution is democratizing access to information in the blockchain ecosystem, thanks to decentralized governance and a sophisticated DAO.