What is API3

API3 is a blockchain oracle project that enables smart contracts to access real-world data by building decentralized APIs (dAPIs) that connect off-chain data sources directly to on-chain applications, eliminating the need for intermediary third-party oracle services.

THE ORACLE PROBLEM API3 SOLVES

Smart contracts on blockchains like Ethereum cannot natively access external data, stock prices, weather, sports results, or any real-world information. This is the oracle problem. Traditional oracle solutions (like Chainlink) use intermediary node operators who retrieve and relay data. API3 argues this introduces a "man-in-the-middle" risk where the intermediary can manipulate or fail to deliver data correctly.

API3'S FIRST-PARTY ORACLE APPROACH

API3 enables the original data providers themselves, weather services, financial data companies, sports APIs , to run their own oracle nodes (called Airnodes). This is called a "first-party oracle" approach. Data flows directly from source to blockchain without a trusted intermediary, reducing manipulation risk and improving accountability.

DAPIS: DECENTRALIZED API AGGREGATION

Multiple first-party Airnodes reporting the same data type are aggregated into dAPIs (decentralized APIs). DApps subscribe to a dAPI to receive aggregated, median-filtered data feeds, similar to how Chainlink Data Feeds work, but with first-party sourcing throughout.

THE API3 TOKEN

The API3 governance token allows holders to participate in DAO governance (voting on protocol parameters and data feeds), stake tokens in an insurance pool to earn rewards, and cover potential data malfunction insurance claims paid to dApp users.

API3 IN THE ECOSYSTEM

API3 operates across multiple blockchains including Ethereum, Polygon, BNB Chain, and others. Their Airnode infrastructure has been adopted by dozens of data providers and DeFi applications that require reliable external data feeds.

Terms in addition to the API3

Blockchain

A blockchain is a subset of a distributed database. The Bitcoin inventors originally prototyped the system in 2008. This modern database is made up of separate blocks that are connected together in a chronological chain. Blockchains may be used to store a wide range of data types. It has mostly been utilized as a public ledger for bitcoin transactions to date. A peer-to-peer network comprised of independent nodes uses a consensus process to ensure the blockchain's security and legitimacy. Each node in the network keeps a public and immutable copy of the data.

2 Factor Authentication (2FA)

2 Factor Authentication is a security measure with two layers. It is used by the majority of cryptocurrency exchanges. To log in, you must provide not only a password, but also a code obtained, for example, from the Google authenticator.

Airdrop

An airdrop is a method of distributing coins. End users can typically obtain coins for free or in exchange for doing a small task, such as subscribing to a newsletter, sending a tweet, or inviting others via a personal affiliate link. Cryptocurrency airdrops — the act of depositing cryptocurrency into public crypto wallets — are utilized as a marketing, liquidity creation, and network bootstrapping technique for many different types of blockchain initiatives.

Altcoin

Altcoin - "alternative coin" - is any kind of digital currency other than Bitcoin. Since the launch of Bitcoin, the world's first digital currency, many altcoins (as well as supporting blockchains) have been created. Altcoin digital currencies share many similarities to Bitcoin, but consistently and have significant differences. There are about 20,000 altcoins, and this number is expected to grow significantly in the coming years. Altcoins often develop Bitcoin features. Ethereum, currently the most widely used blockchain, supports digital contracts and separate applications where Bitcoin does not. Altcoins are also often created to cater to the needs of different users. The Litecoin blockchain, for example, can process payments quarterly for the duration of Bitcoin.

Cold Storage

Cold storage is the way to store cryptocurrency offline. The word refers to the use of offline wallets that are not connected to the internet. Cold storage is the most secure way to keep cryptocurrencies since an offline currency becomes less likely to be hacked and stolen. Paper wallets, printed renditions of private keys, and offline hardware and software wallets are all examples of cold storage.