What is API3 (API3)?

Deep Dive

1. Purpose & Value Proposition

API3 addresses the “oracle problem” by enabling API providers to directly supply data to blockchains via dAPIs (decentralized APIs). Unlike competitors that rely on third-party node operators, API3’s first-party model reduces attack vectors and costs by letting data sources (e.g., weather APIs, financial indices) operate their own oracle nodes using Airnode, a serverless, open-source tool. This ensures data transparency and accountability at the source level.

2. Technology & Architecture

The network’s backbone is Airnode, a lightweight, permissionless node that API providers deploy to serve on-chain requests. dAPIs aggregate data from multiple Airnodes, creating decentralized feeds. The OEV Network (Oracle Extractable Value) allows DeFi protocols to recapture value lost to arbitrage during oracle updates, redistributing it back to dApp developers and stakers.

3. Tokenomics & Governance

The API3 token powers staking, governance, and fee-sharing. Stakers collateralize the network to underwrite service coverage (insurance for dAPI users) and earn rewards. The API3 DAO manages protocol parameters, dAPI curation, and treasury allocations, ensuring decentralized decision-making aligned with stakeholder incentives.

Conclusion

API3 reimagines oracle design by aligning data providers and consumers directly, prioritizing transparency and cost efficiency. Its first-party model and DAO-driven governance position it as a unique player in decentralized infrastructure. How might broader adoption of Airnodes reshape trust assumptions in Web3 data pipelines?