API3 | The Next Generation Of Oracle
Apr 5, 2022
On API3's website, the project is described as “decentralized APIs for Web 3.0”, where you can create powerful decentralized applications with API3's decentrally governed and quantifiably secure data feeds. Just like Chainlink they are talking about connecting smart contracts to real-world data.
We see the same mission from Chainlink and many others oracles, which are solving similar problem however API3 is coming is coming in with a very significantly optimized 2.0 version of this. They are data provider-operated. This is probably their biggest selling point. The reality is that Chainlink and other oracles are what’s called third party oracle services where essentially, they are middlemen between the api provider and the actual data source of the smart contract. Chainlink is essentially middlemen data, whereas API3 is removing the middleman and allowing for API providers or API operators to directly onboard data onto the blockchain. Many people think that API3 is trying to be Chainlink’s Killer. However, Chainlink isn’t doing anything to transition to first party oracles.
API3 is quantifiably secure, meaning users are insured against data feed malfunctions. API3 is decentralized to the core as API3 data feeds are never subject to data tampering and denial of service attacks by intermediaries without third-party node operators. As a result, they achieve higher cost efficiency with fewer attack surfaces. Source-level decentralization of dAPIs is enabled by Airnode, a fully serverless oracle node that can be deployed by any API provider for free and requires minimal day-to-day management.
Overview of API3 mechanics
These are the 3 important features of API3:
- Beacons: Beacons allow smart contract developers to connect Web3 applications to continuously updated streams of off-chain data operated by the market’s most trusted and reliable data providers. Beacons are a transparent, cost-efficient and scalable way for smart contracts to interact with the off-chain data they need.
- API3 alliance: Web 3 is the biggest growth opportunity for businesses since the world wide web but it has been difficult for traditional businesses to access. The API3 alliance changes that. By joining the API3 alliance the user will be part of the next iteration of the internet before it gets crowded.
- Airnode: Blockchain-based web 3 applications have been limited by their inability to use real-world data and services. Airnode is the standardized api connectivity protocol that solves the Web3 accessibility problem. It is open source and effortless. Airnode is kind of Web3 middleware that connects web api’s directly to smart contracts.
The native utility token of API3 is the API3 token. This currency can be used to pay for subscription fees on dApps and also grants users access to airnodes which are part of a decentralized network that provides apis required by developers. Using the API3 token all community members will be able to participate in governing and increasing the value of their decentralized network. The project incentivizes participation by paying out staking and inflationary rewards for those who stake their tokens in the insurance contract.
API3 has a total supply of about 111 million. With a market of about 610 million USD and a current price of around 5.50 USD. API3 is still having a lot of room to grow as their approaches are different to other oracles.