API3 is a project that aims to bridge the gap between blockchain technology and traditional application programming interfaces (APIs). The project's primary objective is to enable decentralized versions of APIs to be built, managed, and potentially monetized at scale. API3 strives to provide smart contracts with timely, real-world data, which is crucial for various sectors, including decentralized finance and supply chain management. The API3 token, an ERC-20 token based on the Ethereum blockchain, plays a vital role in the API3 ecosystem, allowing token holders to participate in the project's governance.

API3 works by enabling API providers to potentially operate their own nodes, thereby eliminating the need for third-party oracles. This approach aims to solve the "Blockchain Oracle Problem," which refers to the challenge of providing smart contracts with real-world data. API3's solution involves the use of a light and robust middleware called Airnode, which can be deployed in minutes. Airnode enhances transparency and aims to reduce transaction fees, making API3 a practical solution for connecting smart contracts with real-world data.

API3 has a wide range of potential use cases, particularly in sectors that rely heavily on real-time data. For instance, in the decentralized finance (DeFi) sector, API3 can provide accurate and up-to-date price data for various cryptocurrencies, enabling smart contracts to execute trades based on the most current market information. Similarly, in supply chain management, API3 can provide real-time data on product location, status, and other critical details, enabling smart contracts to automate various processes in the supply chain. API3's ability to aim to provide direct connections between APIs and smart contracts opens up numerous possibilities for blockchain integration in various industries.

API3 was unveiled in September 2020 with the release of its whitepaper, which outlined the project's goals and the challenges it aims to address. The project was brought to life by three co-founders: Heikki Vanttinen, Burak Benligiray, and Saša Milić, who have backgrounds in blockchain technology, computer science, and data science. The API3 token went live in December 2020 following a token sale that generated funding. Since its inception, API3 has been working towards its aim of enabling API providers to potentially operate their own nodes, thereby providing a direct connection between smart contracts and real-world data.

Instead of traditional oracles that depend on centralized intermediaries to fetch and deliver data, API3 employs a decentralized network of first-party oracles known as Airnodes. These Airnodes are operated by API providers, with the intention to maintain data integrity and reliability. API3 operates on a decentralized governance model, where Airnode operators stake API3 tokens as collateral with the aim of ensuring the accuracy of their data feeds. Smart contracts known as dAPIs facilitate the interaction between dApps and Airnodes, enabling seamless data retrieval without compromising security. This trustless setup seeks to reduce the need for intermediaries, with the intention to lower costs and improve efficiency. API3 token holders govern the network, with the intention to maintain transparency and accountability.

API3's approach to providing first-party oracle services is centered around the use of its proprietary Airnode technology. Unlike traditional third-party oracles, API3's Airnode is a first-party oracle, meaning the node is hosted in the infrastructure of the API provider. This is designed with the intention of improving security, cost efficiency, and transparency. API3's first-party oracles are designed to provide signed data from the API provider directly to any blockchain, with the aim of delivering oracle services flexibly. API3 places importance on decentralized governance for the maintenance of its oracle network's integrity. It seeks to establish a network of first-party oracles governed in a decentralized manner, with the intention of addressing the API connectivity issue and enabling the development of decentralized applications.

API3's Airnode technology aims to provide a unique approach to the oracle ecosystem by enabling API providers to operate their own oracle nodes. This technology strives to connect off-chain data and on-chain decentralized applications (dApps) without the need for intermediaries. Airnode is designed to be easily deployed by any API provider, requiring minimal maintenance. This "set and forget" principle eliminates the need for daily maintenance and monitoring, aiming to improve resilience against downtime. Moreover, Airnode is built on services priced on-demand, meaning that the node operators incur costs based on the usage of their node. This enables API providers to operate an oracle at no initial cost and begin incurring costs only after they commence operations. For smart contracts, this facilitates access to real-world data. Additionally, Airnode's protocol is designed in a way that the requester covers all gas costs for oracle transactions, lessening the operational responsibilities on the node operators.

API3 is a decentralized API infrastructure that intends to offer a potential solution for data feeds. It leverages a distinctive architecture known as Airnode, a decentralized oracle node that acts as a bridge between smart contracts and off-chain data sources. This approach seeks to reduce dependency on third-party intermediaries, potentially reducing the risk of data manipulation or tampering. API3 also uses a crypto-economic mechanism backed by API3's native token, which encourages node operators to provide accurate and timely data. Moreover, API3's infrastructure is designed to be scalable, which could enhance its robustness and reliability.

Developers can incorporate API3 oracles into their DApps by utilizing API3's proprietary technology, Airnode, and its decentralized APIs (dAPIs). Airnode is an oracle node developed by API3 that allows API providers to directly connect their data to DApps running on various blockchains. This approach seeks to reduce dependency on third-party intermediaries, aiming to maintain the security and reliability of data feeds. API3's dAPIs are aggregated from first-party oracles directly on the native chain, with the intention of maintaining data transparency and reliability. Developers can access these dAPIs through the API3 Market, an accessible platform that lists all available dAPIs. The integration process is designed to be uniform for all data feeds. Developers can read the dAPI's value using a proxy contract, which abstracts away any further technical lifting.

API3 is designed to alter the way smart contracts interact with real-world data by providing a decentralized API infrastructure. It introduces the concept of Decentralized APIs (dAPIs), which are networks of first-party oracles operated by the API providers themselves. This is intended to reduce the need for third-party intermediaries, which are often seen as a security risk and an additional cost. API3's architecture includes a distinctive component called Airnode, a serverless oracle node designed for first-party oracles. This allows API providers to operate their own oracles, with the intention of providing data to smart contracts that is intended to be accurate, reliable, and resistant to tampering.

API3 seeks to address the issues of trust and authenticity in oracle solutions by leveraging a unique architecture that includes a decentralized network of nodes, known as Airnodes, and a crypto-economic guarantee. The Airnodes act as a bridge between smart contracts and off-chain data sources, with the intention of providing data that strives to be reliable and resistant to tampering. API3's first-party oracle model seeks to reduce dependency on third-party intermediaries, reducing the risk of manipulation or tampering. The crypto-economic guarantee, backed by API3's native token, creates a robust incentive structure for node operators to align with the network's objectives. This combination of a decentralized infrastructure and a crypto-economic guarantee strives to offer an API infrastructure that allows decentralized applications to access off-chain data sources in a trustless manner.