API3 Frequently Asked Questions

If you can’t find the answer to your question about API3 below, try asking in our Telegram https://t.me/API3DAO. This is intended to be a brief overview of some common questions, there is much more information on our website including our white paper.


Frequently Asked Questions

What is API3?

How does API3 differ from existing oracle solutions?

What is a decentralized API (dAPI)

What is a first-party oracle?

What is Airnode?

How is API3 governed?

What platform is the API3 DAO built on?

How does API3 provide quantifiable and trustless security guarantees for its dAPIs?

How do API3 plan to scale?

Where can I learn more about API3?


What is API3?

API3 is a DAO dedicated to build, manage and monetize decentralized APIs at scale. Decentralized APIs will provide data to blockchain projects and dapps with quantifiable and trustless security guarantees.


How does API3 differ from existing oracle solutions?

Traditional oracle projects aim to solve the oracle problem by achieving a generic decentralized interface between two arbitrary systems. In contrast, API3 focuses on the API connectivity problem, which is specifically concerned with interfacing Web APIs to smart contract platforms in a decentralized way. This narrowed-down definition of the problem allows API3 to reach a more optimal solution.


What is a decentralized API (dAPI)?

Traditional businesses offer a wide variety of services over Web APIs, ranging from providing asset price data to executing traditional financial transactions. A decentralized API (dAPI for short) is a secure and cost-efficient solution to provide a traditional API service to smart contracts in a decentralized way. dAPIs are composed of first-party oracles operated by API providers, and are more secure and cost-efficient compared to alternative solutions that employ middlemen. In addition, dAPIs are governed decentrally, providing them with end-to-end decentralization.


What is a first-party oracle?

Oracles are commonly used to interface Web APIs to smart contract platforms. If the oracle is operated by the API provider, it is called a first-party oracle. If the oracle is operated by an independent middleman, it is called a third-party oracle. First-party oracles are more secure and cost-efficient compared to third-party oracles due to the lack of a middleman.


What is Airnode?

Existing oracle solutions employ third-party oracles because it is often not feasible for the API providers to operate their own oracle nodes. API3 data feeds will be composed of first-party oracles operated by the API providers. This will be made possible by Airnode, a fully-serverless oracle node that is designed to require no know-how, maintenance or upkeep from the API provider. Airnode is an open source project that will be maintained by API3 and will not require a specific payment token to be used.


How is API3 governed?

API3 will have a completely open and direct governance model, where any API3 token holder will be able to stake to obtain direct voting privileges in the API3 DAO. In addition, stakers will receive a portion of the dAPI revenue, inflationary staking rewards and any additional benefits that the DAO may decide on in the future. The staked API3 tokens will back an on-chain insurance service as collateral to provide dAPI users with quantifiable and trustless security guarantees. As such, the governing parties will be exposed to all risks and rewards of API3, and will govern to optimize them.


What platform is the API3 DAO built on?

The API3 DAO is being co-developed with DAOstack, who are also among the initial members of the API3 DAO.


How does API3 provide quantifiable and trustless security guarantees for its dAPIs?

The API3 tokens staked to receive rewards and voting power at the DAO are also used to collateralize an insurance service. In the case of a malfunction, the dAPI user will be able to claim compensation up to a pre-negotiated amount from the staking pool. Kleros will be used to decide if the claim is to be paid out based on the presented evidence. This will incentivize stakers to actively participate in governance to ensure that dAPIs are being managed transparently and in a way that minimizes security risks.


How do API3 plan to scale?

API3 will utilize second layer solutions to be able to use a large number of oracles and advanced aggregation methods without being limited by Ethereum gas prices. While the API3 DAO resides on Ethereum, the data will be aggregated on xDai and bridged to Ethereum and other smart contract platforms. For high value use cases, mainnet-native dAPIs will be employed as failsafes. The insurance service described above will allow the user to enjoy the lower cost allowed by the scaling solution without being exposed to its risks.


Where can I learn more about API3?

General enquiries are best directed to our Telegram - https://t.me/API3DAO. Developers looking to contribute to API3 or integrate our dAPIs will find more detailed advice on Keybase - https://keybase.io/team/api3. Our website has much more general information as well as links to our whitepaper - www.api3.org.