API3 is a decentralised network focused on providing real-world data to blockchain applications through decentralised APIs (dAPIs), emphasising security, transparency, and efficiency. The initiative is driven by API3 token holders who govern the project and its developments, ensuring a community-driven approach.
Introduction to API3
API3 stands for API for Web 3.0, representing the third generation of internet services for websites and applications. Unlike traditional APIs, which are centralised, API3 offers fully decentralised API services designed to feed blockchain applications with timely and reliable data directly from sources without intermediaries. This approach aims to solve the issues of trust and middlemen in data transmission to blockchains, enhancing direct integration with data providers.
In the blockchain ecosystem, API3 stands out by enabling direct and decentralised connections between data providers and blockchain applications, eliminating intermediaries and fostering a secure and transparent environment. With its innovative Airnode protocol and a robust governance model, API3 is poised to play a critical role in the evolution of decentralised applications and the broader Web 3.0 landscape.
API3 provides a robust Oracle infrastructure to developers on Ethereum-based Layer 1 and Layer 2 networks, effectively connecting real-world data with smart contracts. By collaborating directly with data providers, API3 offers decentralised APIs (dAPIs) for decentralised applications (dApps). This direct partnership ensures that the data sources are both provable and verifiable, positioning API3's Oracle stack as 'first-party'. In contrast, many other Oracle solutions act as 'third-party' by obscuring data sources and involving intermediaries.
API3’s technology is currently integrated with 20 EVM blockchains with a commitment to the Ethereum ecosystem and a decentralised, developer-first approach. API3 forecasts the increase of their technology's availability to a total of 30 EVM L1 & L2 blockchains by the end of the year. Adoption has been increasing, reflecting the recent Total Value Secured (TVS) increase, as TVS has grown exponentially from just $20M in January 2024 to over $600M in May 2024.
How API3 Works
API3 simplifies the process of delivering data to blockchain networks through its innovative product, Airnode, which facilitates seamless data integration. This capability unlocks a broad spectrum of applications in blockchain sectors that depend on real-time data. For instance, decentralised finance (DeFi) platforms require immediate access to up-to-date price data of digital assets to allow smart contracts to execute trades based on current market conditions. The API3 Market, a pioneering platform in the Oracle space, enables the automated configuration of price feeds with just a few clicks.
Airnode is designed as a lightweight, serverless Oracle node that data providers can easily deploy. This allows them to offer their data directly on-chain, in contrast to other Oracle networks, which typically require more complex infrastructure and intermediate nodes.
Looking ahead
API3 is set to launch a ground-breaking product designed to address Maximum Extractable Value (MEV) issues in lending protocols. Current Oracle update methods lead to value leakage as block producers prioritise transactions for Oracle price updates. API3's upcoming solution aims to enable lending protocols to reclaim this value, thereby enhancing their efficiency and competitiveness in the marketplace.
API3 Governance
Governance in the API3 ecosystem is wholly decentralised, with API3 token holders responsible for managing the protocol. Token holders can propose changes, vote on upgrades, and participate in decisions that shape the project's future direction. This democratic process ensures that the development of the API3 ecosystem aligns with the interests of its users and providers.
API3 Tokenomics
The API3 token plays a central role in the ecosystem, serving both as a utility and governance token. Here are some key aspects of API3's tokenomics:
- Supply: The total supply started at 100M API3 tokens. API3 is an inflationary token with a floating inflation rate .
- Staking: The staking target threshold is at 50%, if the amount staked is under that, it is increased by 1% per week, if it is over it decreases by 1%.
Conclusion
API3's introduction of decentralised APIs (dAPIs) marks a significant evolution in the intersection of traditional data services and the burgeoning world of blockchain technology. SwissBorg recognises the importance of API3’s innovation, particularly its potential to enhance the scalability and efficiency of blockchain applications through direct, secure, and transparent data provision. The API3 model not only aligns with our mission of democratising finance but also enriches the blockchain ecosystem, making it more accessible and powerful.
As SwissBorg continues to explore and integrate advanced solutions that support our community's growth and financial autonomy, API3's development signifies a broader move towards a decentralised future where data and finance coexist seamlessly. We commend API3’s commitment to decentralisation and look forward to potential synergies that could further empower our users, improve our offerings, and sustain the momentum towards an interconnected, decentralised financial landscape. For anyone interested in the mechanics and benefits of API3 and how it could revolutionise data handling in blockchain projects, this development is worth close attention.
