API3 is a blockchain-based project dedicated to building new decentralized APIs for Web3. Unlike traditional APIs, decentralized ones are running on blockchain and can be directly called by smart contracts on-chain. This enables easier development and better transparency. Also, such an approach allows getting rid of middlemen that are usually running the oracles. Thus, there are fewer points of failure and fewer fees to be paid for obtaining the information needed for the contract to function.
In addition to the oracle problem, API3 aims to solve the governance issues for the API data aggregation. Unlike most of the solutions available on the market at the time of writing, API3 is controlled via DAO (Decentralized Autonomous Organization) instead of a centralized entity. The native API3 token is used to determine the voting power of any given participant.
The project is fueled by a native utility token API3 which serves the governance purposes on the platform. When staked, it provides its users with voting power directly proportional to the amount of API3 tokens at stake. The tokens are used to build up the coverage pool that should protect users in case some of the dAPIs malfunction.
API3 is only available as an ERC20 token and can be exchanged at Uniswap, Sushiswap, and other popular Ethereum-based DEXes. As for the centralized exchanges, Binance, OKX, BingX, and MEXC are some of the most popular options.
The private ICO occurred on November 12th, 2020, with six major funds participating in the round and bringing the project the sum equalling $3 million USD. The list includes Placeholder, Pantera Capital, Accomplice, CoinFund, Digital Currency Group, and Hashed. The public IEO was placed at the Mesa DEX, known as a CowSwap at the time of writing. The IEO took place on November 30th, 2020, with the token distributed at the initial price of 0,30 USDT and the ceiling price of 2,00 USDT. 20 million API3 tokens were distributed at a public round. Out of 100 million API3 tokens released, only 20 million were distributed publicly. The other 15 million were distributed among seed investors, 15 million more were shared among strategic partners, 35 million went to the ecosystem fund and 30 million went to the founders themselves.
As mentioned earlier, API3 aims to get rid of blockchain oracles that could be corrupt or simply result in high implementation costs on some of the blockchains like Ethereum. To achieve that, API3 shifts the oracle problem from the blockchain to the API provider itself via the so-called Airnode.
From the technical perspective, Airnode represents an API gateway for blockchain applications. It can be installed on the same platforms API providers already use, providing a connection layer between a blockchain and the off-chain data served by the API. Installing an Airnode doesn’t require any experience with blockchain nodes, as it was intentionally developed as a “Plug & Play” solution that would be both blockchain- and cloud-native. This architecture is crucial for the API3 as it’s been designed to be massively adopted by both API providers and the cloud services in the form of a preset configuration.
The blockchain-native nature of the Airnodes allows API3 to get rid of the centralized oracles, while their ability to be installed in the cloud alongside the API provider’s software enables great cost reduction. Combined with the direct connection between dApps and API providers, this feature results in a practical use case of API3’s technology.
At the time of writing, the only part of the project that is completely ready is the decentralized governance. Another crucial technical aspect, the Airnode, is in the 0.2 beta version. It can already fetch data from the API provider and send it to the blockchain, however, it requires some additional steps and manual whitelisting to function. The future updates are going to focus more on automatization and convenience for the API providers.
The team has also founded the API3 Alliance that connects everyone willing to dedicate their APIs to the Web3 via the Airnodes. At the time of writing, more than 150 API providers have already joined the Alliance. The future steps include opening access to all developers and creating a subscription model for the Web3 APIs. It is also planned to make it possible to lock API3 on Ethereum while using Web3 APIs on the other API3-compatible chains.
The API3 team also plans to build a decentralized data sourcing mechanism based on transparent Data Beacons, i.e. feeds that take information directly from the source. It will also be possible to use the coverage pools for insurance of those who lost money due to the API’s malfunctions. Upon completion of all the goals, API3 plans to become the major link connecting the real world and the world of cryptocurrencies available on several programmatic blockchains and serving millions of smart contract users with accurate real-world data.
API3 team and partners
API3 has been founded by three people: Heikki Vanttinen, Burak Benligiray, and Saša Milić. Heikki Vanttinen previously founded CLC Group, a blockchain-centered company dedicated to connecting smart contracts with real life. API3 obviously follows the same idea with the revolutionary concept of Web2 APIs’ seamless integration into the Web3 world. Burak Benligiray has also been working at CLC Group, serving as a chief technical officer. He was the one to later incorporate ChainAPI into the new API3 project.
The only one of the API3’s founders that didn’t come from the CLC Group is Saša Milić. At that time, she was a data scientist working for Gauntlet and a lecturer at the University of Toronto. She has been mostly focused on the technicalities and underlying math of blockchain computations and continues to do so, while also analyzing important crypto events and explaining the issues for the current blockchain applications in her blog.
API3 team holds a large number of partners, from blockchain projects like Polygon, Fantom, Harmony, 0Chain, and Sovryn, to funds like Solidity Ventures and the aforementioned Placeholder, Pantera Capital, Accomplice, CoinFund, Digital Currency Group, and Hashed.