Several blockchain networks have been created to make applications and programs possible. Accessing or using data is one of the major issues these blockchains are trying to solve, but they still don’t provide the proper outcome in terms of actual, real-life data. Bitcoin was the pioneer application of the blockchain system.
As you may recall, Bitcoin uses blockchain technology in an attempt to create a secure currency that can be shared and used by many people around the world. However, the challenge with this is how to get reliable external data on-chain. These blockchains don’t have that type of programming built into them. So, what if we could change that? That’s where API3 Coin enters the picture.
API3 and Web 3.0 Basics
The API3 platform, which was introduced in December 2020, enables blockchain-based decentralized applications (dApps) to use application programming interfaces to access external, real data and services. Application programming interfaces are becoming a de facto norm in the industry. With the simplicity and uniformity of API3 connection, data from all across the globe can be fed into blockchain applications.
To avoid having to reinvent the wheel and write all the code from scratch, programmers often use pre-existing APIs to import new datasets or services into an existing program or application. A weather app, for instance, may use an API to get the most up-to-date information on the weather in your area. A lot of the apps and programs we use every day couldn’t exist without APIs.
The majority of existing APIs are not designed with the world of blockchain and decentralized apps (dApps) in mind. Instead, they were developed for the “old ecosystem” of centralized applications, data, and financial services. It is API3’s goal to bring all current APIs up to Web 3.0 decentralization requirements in a way that doesn’t put an undue burden on API providers or dApp developers.
Decentralized APIs: Connecting Decentralized Networks
API3 has created its own decentralized application programming interfaces to facilitate the distributed transfer of data from off-chain to on-chain systems. These APIs are completely decentralized; they don’t rely on any proprietary infrastructure or a centralized, rent-seeking gatekeeper to function.
If a decentralized ecosystem requires data, it may connect to a decentralized API, which can then be used as a bridge to support any blockchain. Many systems may benefit from access to trustworthy data oracles, and since API3 is blockchain-agnostic, it can function with almost any distributed ledger that supports smart contracts.
Airnode and First-Party Oracles
Instead of using oracle nodes hosted by a third party as most other oracle projects do, API3 makes use of oracle nodes run by the data providers themselves. API3 does this by using Airnode, a technology that enables API providers to transform their APIs into dAPIs.
Due to Airnode’s decentralization of data streams at their sources, dApps may now access data without going through any middle nodes. A server-less oracle node, Air-node is simple for an API provider to set up and requires no routine maintenance. Air-node simplifies the process of monetizing data feeds in a decentralized environment for oracle API providers.
Airnode was designed to be a simple deployment that can be set up and forgotten. As a bonus, Airnode leverages on-demand pricing to ensure that oracle API providers are not out of pocket for hosting expenses during periods when their API is not being used.
Decentralized Governance and the API3 Token
The API3 dAPIs are managed by the API3 decentralized autonomous organization (DAO), which also offers decentralized governance for the project. Decentralized governance allows dAPIs to be run with more openness and safety against single points of failure.
The API3 DAO governs both individual dAPIs on the platform and the larger API3 project. The API3 DAO manages dAPI creation, setup, monitoring, and monetization, as well as gas fees and oracle API provider pay. Subtle incentive systems including governance, staking, and security have been put in place to ensure the smooth operation of the API3 DAO.
The API3 token is used for all transactions and community management inside the API3 DAO since it is the native utility token of API3. If an API provider on Airnode doesn’t want to deal with cryptocurrencies, they may accept payment in fiat via an API3 DAO grant, which is what dApps utilizing the dAPI network will pay as a membership fee.
We know that blockchain technology has a ton of potential, but its huge popularity means that there are still lots of issues and questions surrounding it. People want to deal with real-life data sets. Will API3 Coin be able to provide high-quality external data for every part of the world? What other use cases exist for this type of blockchain so far? We’ll have to wait and see.