API3 is a first-party oracle network that enables smart contracts to securely access real-world data and off-chain services. Unlike third-party oracle networks that rely on intermediary nodes to fetch and deliver data, API3's core innovation is the Airnode, a serverless oracle node that allows traditional Application Programming Interfaces (APIs) to connect directly to any blockchain. This architecture reduces latency, eliminates unnecessary middleware, and aligns the economic incentives of the data provider with the security of the data feed.
LABS
Glossary
API3
API3 is a decentralized oracle network that enables data providers to operate their own nodes, delivering first-party data feeds directly to on-chain applications.
Chainscore © 2026
definition
DECENTRALIZED ORACLE NETWORK
What is API3?
API3 is a decentralized oracle network that enables smart contracts to access real-world data and off-chain services directly from first-party data providers.
The network is governed by the API3 DAO (Decentralized Autonomous Organization), which manages the treasury and oversees the development of the protocol. A key component is the dAPI (decentralized API), which aggregates data feeds from multiple first-party providers to create a single, decentralized, and cryptographically secure data source. These dAPIs are quantifiably secure, meaning their security can be measured by the amount of API3 tokens staked as collateral by the data providers, creating a transparent and economically secured service.
API3 addresses critical challenges in the oracle problem, specifically data authenticity and provider accountability. By allowing API providers to run their own Airnodes, the data provenance is clear and the provider is directly responsible for the service's reliability. This model is particularly suited for high-value, sensitive, or proprietary data feeds where trust in the source is paramount, such as financial market data, insurance parameters, or supply chain information.
The API3 token serves three primary functions within the ecosystem: staking, governance, and collateralization. Providers and community members stake tokens to create and secure dAPIs, earning rewards in return. Staked tokens also act as collateral that can be slashed in the event of malicious or faulty data delivery, financially guaranteeing the integrity of the feed. Token holders use their stake to participate in the DAO's governance votes.
In practice, a developer integrates a dAPI by simply reading from its on-chain address, much like calling a standard API. This simplifies the developer experience significantly compared to managing complex oracle node infrastructure. Use cases span DeFi (for price feeds), dynamic NFTs, parametric insurance, and enterprise blockchain solutions, providing a trust-minimized bridge between Web2 data infrastructure and Web3 applications.
how-it-works
DECENTRALIZED ORACLE ARCHITECTURE
How API3 Works
API3 operates as a decentralized oracle network where data providers run their own first-party oracle nodes, eliminating intermediaries to deliver data directly and securely to smart contracts.
At its core, API3's architecture is built on first-party oracles. Unlike third-party oracle networks that rely on intermediary nodes to fetch and relay data, API3 enables traditional Web2 API providers to operate their own blockchain-native oracle nodes, called dAPIs (decentralized APIs). This direct approach removes unnecessary layers, reducing trust assumptions, lowering latency, and allowing data providers to maintain full control over their data feed's integrity and service level agreements.
The network is governed by the API3 DAO, which uses the API3 token for staking, governance, and collateralization. Data providers and other participants stake API3 tokens as collateral to back the dAPIs they operate. This staked collateral provides a cryptoeconomic security guarantee to the dApp users consuming the data; if a dAPI provides faulty data, its staked collateral can be slashed to compensate users, creating a direct and enforceable service-level agreement on-chain.
Technically, a dAPI is an aggregated data feed composed of multiple first-party oracle nodes run by independent data providers. This aggregation creates a decentralized data source that is resistant to downtime and manipulation. The data is served on-chain through Airnode, a serverless oracle node implementation designed to be easily deployed by any API provider with minimal setup, requiring no blockchain-specific expertise.
Smart contract developers interact with these dAPIs through a simple read function call, abstracting away the underlying oracle infrastructure. The API3 Market provides a user interface for discovering, funding, and managing data feeds. Consumers pay subscription fees in stablecoins to access dAPI services, and these fees are distributed to the staking pool, rewarding API3 stakers and the data providers who operate the nodes.
This model aligns incentives among all participants: data providers earn revenue and maintain their reputation, stakers earn rewards for securing the network, and dApp developers gain access to transparent, cost-effective, and reliable real-world data. By bridging APIs to blockchains without third parties, API3 aims to create a more scalable and trust-minimized oracle solution for the Web3 ecosystem.
key-features
DECENTRALIZED ORACLE ARCHITECTURE
Key Features of API3
API3 is a first-party oracle solution that enables data providers to operate their own nodes, delivering data directly to smart contracts without intermediaries.
ecosystem-usage
API3
Ecosystem Usage
API3 is a decentralized oracle solution that enables first-party data providers to operate their own nodes, delivering data directly to smart contracts. This section details its core components and how they are used in the Web3 ecosystem.
airnode
API3 CORE COMPONENT
Airnode: The First-Party Oracle
Airnode is a serverless, first-party oracle node designed to allow API providers to directly serve their data on-chain without intermediaries.
An Airnode is a fully serverless oracle node that enables traditional web Application Programming Interfaces (APIs) to connect directly to any blockchain. It is the foundational, open-source middleware of the API3 ecosystem, built to be operated by the API providers themselves. This first-party oracle model eliminates the need for third-party middlemen, allowing data providers to maintain full control over their data feeds, their operational integrity, and the associated revenue streams. By running an Airnode, an API provider becomes a first-party oracle provider, creating a direct and trust-minimized link between their off-chain data and on-chain smart contracts.
The architecture of Airnode is designed for simplicity and reliability. It is built to be serverless, meaning it does not require the provider to manage any dedicated infrastructure; it can be deployed as a set of cloud functions (e.g., AWS Lambda). Its operation is stateless and non-custodial, so it never holds private keys or funds. To request data, a smart contract sends a request to the AirnodeRrpV0.sol protocol contract on-chain. The Airnode, which continuously listens to these events, fetches the data from its configured API endpoint and delivers the signed response back on-chain in a single transaction, a process known as the request-response protocol.
Key technical features include QRNG (Quantum-Resistant Random Number Generation) services, sponsored and flexible requester-sponsored requests where the user pays gas fees, and dAPI (decentralized API) composability. Security is paramount: as a first-party source, the oracle's security is anchored in the API provider's own reputation and operational security, removing attack vectors associated with intermediary node operators. This design shifts the trust assumption from a syndicate of anonymous third-party nodes to the known, reputable API provider whose business depends on data accuracy.
security-considerations
API3
Security Model & Considerations
API3's security model centers on first-party oracles, where data providers operate their own nodes, eliminating the intermediary layer to reduce attack vectors and align incentives.
01
First-Party Oracle Model
The core security principle where data providers run their own oracle nodes (dAPIs). This eliminates the intermediary node operator layer, reducing attack surfaces like Sybil attacks and misaligned incentives. Providers have a direct, cryptoeconomic stake in the accuracy of their own data feeds.
02
Airnode & dAPI Architecture
Airnode is a serverless, lightweight oracle node designed for easy deployment by API providers. A dAPI (decentralized API) is an aggregated data feed composed of multiple first-party Airnodes. Security is enforced through on-chain aggregation logic and slashing mechanisms for faulty nodes.
04
Quantifiable Security & Coverage
Security is quantified through coverage policies. Stakers underwrite specific dAPIs, with their stake acting as insurance. Users can verify the amount of locked collateral backing a feed. A claim process allows users to be compensated from slashed funds for provable losses due to feed failure.
05
Decentralization at the Data Source
Decentralization is achieved at the data source level, not just the node layer. A robust dAPI aggregates data from multiple independent, first-party providers (e.g., multiple weather agencies). This mitigates risks of a single point of failure or manipulation at the source.
06
Comparison: First-Party vs. Third-Party
- First-Party (API3): Provider=Oracle. Incentives are aligned to data accuracy. Lower systemic complexity.
- Third-Party (Typical Oracle): Middlemen operate nodes. Incentives split between data purchase and node operation, creating potential misalignment and added attack vectors.
ARCHITECTURAL COMPARISON
API3 vs. Traditional Oracle Networks
A technical comparison of first-party and third-party oracle network architectures.
| Architectural Feature | API3 (First-Party) | Traditional Oracle (Third-Party) |
|---|---|---|
Data Source Connection | Direct from API provider (first-party) | Relayed via intermediary node (third-party) |
Oracle Node Operator | Data provider themselves | Independent third-party node runner |
Trust Assumption | Trust in the data source's signed attestations | Trust in the honesty/collusion-resistance of node operators |
Sybil Attack Surface | None (providers have unique identities) | Present (requires staking/collateral to mitigate) |
Data Transparency | Full cryptographic proof of data origin | Opaque; relies on node operator reputation |
Gas Cost Efficiency | Higher (single on-chain transaction) | Lower per node, but multiplied by node count |
Provider Incentive Alignment | Direct (providers earn fees for service) | Indirect (node operators profit from data arbitrage) |
Protocol Governance | API3 DAO (stakeholder-led) | Varies (often foundation or node operator-led) |
examples
API3 ECOSYSTEM
Example Data Feeds & dAPIs
API3 provides decentralized data feeds (dAPIs) where data is sourced, aggregated, and delivered on-chain by first-party oracle nodes operated directly by the data providers themselves.
01
First-Party Oracle Model
The core innovation of API3 is its first-party oracle architecture. Instead of using intermediary third-party node operators, data providers run their own Airnode software to serve data directly to smart contracts. This reduces trust assumptions, removes intermediary rent, and aligns incentives between dApps and the original data source.
02
dAPI (Decentralized API)
A dAPI is a fully decentralized and blockchain-native data feed service. It aggregates data from multiple first-party oracle nodes (e.g., multiple exchange providers for an ETH/USD price) into a single, robust on-chain endpoint. dAPIs are managed by API3 DAO and can be permissionlessly consumed by any smart contract, offering gas-efficient, aggregated data with transparent sourcing.
04
OEV (Oracle Extractable Value)
Oracle Extractable Value (OEV) refers to value that can be extracted from dApps due to latency in oracle updates (e.g., during liquidations). API3's OEV Capture mechanism uses a specialized OEV Network—a sidechain-based auction—to redirect this value, which is typically lost to searchers, back to the dApp and its users, improving protocol economics.
05
API3 Market
The API3 Market is a decentralized platform where data providers can list their services and dApp developers can discover, fund, and manage dAPI subscriptions. It facilitates a direct economic relationship between consumers and providers, with subscriptions paid in API3 tokens. The market is governed by the API3 DAO.
06
Beacon vs dAPI
API3 offers two primary data feed types:
- Beacon: A single-source data feed from one first-party provider. Ideal for niche data or rapid prototyping.
- dAPI: A decentralized aggregate of multiple Beacons (or other sources) for high-value, high-security data like asset prices. dAPIs provide stronger security guarantees through decentralization and are the flagship product for production dApps.
API3
Frequently Asked Questions (FAQ)
Common technical questions about the API3 protocol, its decentralized oracle design, and its role in Web3 infrastructure.
API3 is a decentralized oracle network that enables smart contracts to access real-world data and services directly from first-party data providers. It works by allowing traditional API providers to operate their own oracle nodes, known as Airnodes, which serve data on-chain without third-party intermediaries. This first-party oracle model reduces trust assumptions and eliminates middleman fees. Data feeds, called dAPI, are aggregated from multiple Airnodes to ensure decentralization and reliability. The protocol is governed by the API3 DAO, which manages parameters, staking, and revenue distribution.
ENQUIRY
Get In Touch
today.
Our experts will offer a free quote and a 30min call to discuss your project.
NDA Protected
Confidentiality24h Response
Time to ValueDirectly to Engineering Team
No Sales Fluff10+
Protocols Shipped
$20M+
TVL Overall