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What is API3?

API3 is a decentralized oracle protocol designed to connect traditional Web APIs directly with blockchain-based applications through decentralized APIs, known as dAPIs. Unlike conventional oracle networks that rely on third-party node operators sitting between data providers and smart contracts, API3 enables API providers to run their own oracle nodes, eliminating middlemen and reducing points of failure.

This first-party oracle approach means data is signed at its source, offering stronger security guarantees and more transparent attribution of data provenance. The project was co-founded by Heikki Vänttinen, Burak Benligiray, and Saša Milić, and officially launched its token and mainnet operations in late 2020 following a successful initial DEX offering on Bounce.

Behind API3 stands an active DAO where API3 token holders vote on treasury management, grants, protocol upgrades, and the onboarding of new data providers. The core technology is built around Airnode, a serverless oracle node that API providers can deploy with minimal setup, requiring no ongoing blockchain operations expertise. Airnode is designed to be gasless for the API provider and to scale across dozens of EVM-compatible networks including Ethereum, BNB Chain, Polygon, Arbitrum, Optimism, Avalanche, and Base.

Data feeds delivered via dAPIs are used by numerous DeFi protocols for price information, lending collateral valuation, synthetic assets, perpetuals, and prediction markets. A notable milestone was the launch of OEV Network, an Arbitrum Orbit rollup introduced in 2024 that auctions oracle extractable value back to dApps, returning liquidation and arbitrage profits to the protocols that use API3 feeds rather than letting them leak to searchers.

This innovation positions API3 as a direct competitor to Chainlink, Pyth, and RedStone in the increasingly crowded oracle sector. API3 has established partnerships and integrations with protocols such as dTRINITY, Folks Finance, Aark Digital, and numerous smaller DeFi platforms across Layer 2 ecosystems. The project has also integrated with emerging chains like Mantle, Linea, and Blast, expanding its reach beyond established networks.

Governance is executed through the API3 DAO, which has distributed millions of dollars in grants to ecosystem developers, community projects, and infrastructure contributors since its inception. Token holders can stake API3 in the staking pool, which both secures the service and makes stakers eligible for governance participation and rewards funded by dAPI service fees.

Controversies around API3 have been limited compared to competitors, though the project has faced ongoing debate within the oracle community about the tradeoffs between first-party data sourcing and the broader aggregation model used by Chainlink. The team publishes transparent quarterly reports through the DAO's forum, and treasury holdings are publicly verifiable on-chain.

API3 now offers its data feeds through API3 Market, shares the oracle extractable value from its feed updates with dApps as OEV Rewards, and curates lending vaults on Morpho, positioning itself as a specialized oracle solution focused on capital efficiency and direct data sourcing. The competitive landscape remains intense, but API3's unique first-party model and OEV recapture mechanism give it a differentiated value proposition that appeals to DeFi protocols seeking alternatives to incumbent oracle providers.

Key Features of API3

• First-Party Oracles: API3 eliminates third-party node operators by letting API providers run their own oracles, delivering signed data directly from the source. This reduces attack surfaces, improves data provenance, and cuts out rent-seeking middlemen common in traditional oracle networks.
• Airnode Infrastructure: Airnode is a serverless, set-and-forget oracle node that allows any Web API provider to push on-chain data without maintaining blockchain infrastructure. It is gasless for providers and deployable across more than 30 EVM-compatible networks with minimal configuration.
• DAO Governance: The API3 DAO grants staked token holders direct control over treasury allocation, grants, protocol parameters, and dAPI onboarding decisions. Governance proposals are executed on-chain with transparent voting and documented quarterly reporting.
• OEV Recapture: Through the OEV Network launched on Arbitrum Orbit, API3 auctions oracle extractable value and returns liquidation and arbitrage proceeds back to integrating dApps. This turns a traditional value leak into a revenue stream for protocols using API3 feeds.
• Multi-Chain Coverage: API3 dAPIs are live on Ethereum, Arbitrum, Optimism, Polygon, Base, BNB Chain, Avalanche, Mantle, Linea, and many other EVM ecosystems. This broad deployment enables developers to maintain consistent oracle integrations as they scale across Layer 2 and alt-Layer 1 environments.

API3 Use Cases

• DeFi Price Feeds: Lending protocols, perpetual exchanges, and synthetic asset platforms consume API3 dAPIs for reliable asset price data. First-party sourcing reduces manipulation risk during collateral valuation and liquidation events.
• API Data Monetization: Traditional Web2 API providers deploy Airnode to sell their data streams to on-chain consumers without operating blockchain infrastructure themselves. This opens new revenue channels for weather, sports, financial, and IoT data providers.
• Staking for Rewards: API3 holders can lock tokens in the staking pool to back the protocol's service coverage and earn inflationary rewards. Stakers simultaneously gain voting rights in the DAO, aligning security, governance, and yield in a single action.
• OEV Auctions: DeFi protocols integrate OEV-enabled dAPIs to auction off liquidation opportunities via the OEV Network, capturing value that previously went to MEV searchers. Proceeds flow back to the dApp's treasury or users, improving protocol economics.
• Cross-Chain dApps: Developers building multi-chain applications use API3 to obtain consistent oracle data across dozens of networks with unified integration patterns. This simplifies deployment on emerging Layer 2s and reduces vendor lock-in.

API3 Tokenomics

Total Supply

API3 launched with an initial supply of 100 million tokens distributed through a 2020 IDO, team allocations, and DAO treasury reserves. Supply is inflationary through staking rewards and deflationary through grant burns, so the live figure drifts over time.

Circulating

Circulating supply reflects unlocked team and investor allocations, staked tokens, and DAO-issued rewards, and changes with each governance epoch.

Utility

API3 is used for staking to secure dAPI service coverage, participating in DAO governance votes, and earning rewards from protocol fees and inflation. Stakers also backstop the insurance pool that compensates users in the event of a verified dAPI malfunction.

Emission

Inflation rates are set by the DAO via governance votes and adjusted periodically based on staking participation targets. Rewards are distributed each epoch to stakers, while burns occur when the DAO allocates tokens for grants or operations.

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