At the core of the API3 network is the Airnode, an oracle designed for first party oracles. The Airnode is essentially a lightweight cloud service that wraps the API backend and makes it accessible on the Blockchain. This means each API is served by an oracle that is operated by the entity that owns the API, rather than a third party.
The API3 DAO will govern over the dAPIs or data feeds comprising the aggregation of these oracles. oracles operated by the API providers themselves. API providers operate their own oracles which means they will sign the response with their private key at the smart contract platform protocol level, which is the best proof that the data has not been tampered with. Additionally, exclusive wishes are private by default because third parties cannot observe the API raw data being processed, allowing them to be used natively in a variety of use cases.
A data stream made up of first-party advice is more profitable than a stream using an intermediary, because the middleman must be paid for both their services and incentivized not to attack the stream data (referred to as the middleman tax in section 3.2). In addition, a data stream that includes proprietary oracles will require less prediction, as it will not need excessive decentralization at the oracle level to protect against third-party attacks. Assuming that each API is typically powered by at least two third-party gods, data streams powered by proprietary spells should be at least 50% more efficient in gas costs, according to one careful estimate. First Party oracles also provide much needed transparency in terms of the data 11 API3: Decentralized APIs for Web 3.0 source and the degree of decentralization.
Since each API provider will operate an oracle—which will be visible on chain—the number of oracles serving a data feed will accurately represent how decentralized it is, as there is a one to one mapping between oracle and data source. Furthermore, the API providers would publish their on chain identities through offchain channels, which would allow the users to verify whose data they are consuming at a given time. Finally, having the API providers operate the oracles solves the legal issues mentioned in Section 3.4, as the API services no longer need to be licensed to a third party and the API providers receive the entire revenue. Furthermore, API believes this solves the rent seeking third party oracle problem, and allows the funds to be redirected to the group that is doing the heavy lifting, the API providers. Incentivizing API providers aligns their financial interests with the ones of the API3 ecosystem, resulting in a strong combined incentive between the two.
Use of Native tokens in the ecosystem:
API3 is a platform that seeks to solve a problem that has arisen that most APIs are designed for data ecosystems, financial services as well as legacy centralized applications and are not compatible with the world. of decentralized applications as well as blockchains.