API3 is a great new solution for decentralized applications (dApps).
About API3
API3 was officially known to the public in December 2020, so far it is still quite new.
It is an open source platform that provides a decentralized application programming interface (dAPI).
It is managed by the DAO and operates completely transparently.
Since conventional APIs do not interact with smart contracts, it is impossible to put data into the Blockchain.
Birth of API3 has created a new generation of decentralized APIs, capable of working with Blockchain and solving the above problem extremely easily.
Essentially, API3 is an oracle that allows a Blockchain-based dApp to access external data and services through APIs, without the need for an intermediary.
It can be commented, API3 is a promising method in solving the problem of API connection from different data providers.
Besides, API3 is also considered as a project that serves well for Web3 development - a market with a lot of potential to exploit.
What is special about API3?
First, we need to generalize the following two definitions before going into the details of the problem outlined below:
- First-party oracle mechanism: Data will be obtained directly from API providers.
- Third-party oracle mechanism: Data will be obtained indirectly from API providers through an intermediary and then put into the Blockchain.
The core of API3 project is use of first-party oracle mechanism.
As a result, all connection data will be guaranteed to be accurate and highly secure.
At the same time, completely eliminating intermediaries should save a lot of unnecessary costs and limit fraud.
In fact, traditional API service providers face countless barriers and difficulties when operating an oracle node on their own such as:
- Not familiar with Blockchain technology.
- It consumes a lot of resources in the form of labor and infrastructure costs.
- Forced cryptocurrency transactions like paying gas costs to the network...
Recognizing these obstacles, the API3 project has also proposed the Airnode method, which helps to solve all the problems that the current API service providers are facing.
Essentially, Airnode is a cloud service that backends APIs and makes them accessible on the Blockchain.
What problems does API3 solve?
API connection problem
Oracle's problem revolves around a very simple limitation, which is that Blockchains are not capable of taking data and put it from any system as built-in functionality.
This means that Blockchains have become isolated and look like a computer that is not connected to the Internet.
Blockchain's isolation has also made it extremely secure and reliable.
However, in order to take advantage of the potential of smart contracts, we need to connect to information outside of the Blockchain.
Besides, the need to provide accurate data for Blockchain environments is also a necessary factor in creating the best decentralized application - platform - market.
And API3 completely solves this problem through a powerful new oracle solution, called dAPI.
Beacons - allow smart contracts to interact with data off-chain
Beacons allow smart contract developers to connect Web3 applications with a continuously updated off-chain data stream.
It is a technology operated by the most trusted data providers in the market, operating completely transparently.
In addition, Beacons also help to save costs optimally.
dAPI - API connection solution
dAPI can be connected to backend Blockchain.
Besides, they also exist as a cross-platform Oracle solution, providing the data any decentralized ecosystem needs.
This solution enhances transparency and reduces the risk of data tampering in third-party connections.
Airnode
API3 uses oracle nodes operated directly by the data provider, with Airnode technology.
Thereby, API providers are allowed to convert their API into dAPI.
This solution eliminates middleman nodes and allows dApps to access data directly.
