Understanding dAPIs
As an affiliate it is important to have an understanding of API3’s Oracle Stack.
You can do this by digesting key information about our technical product framework. This includes an introduction of each service, an understanding of dAPIs and consideration of potential user challenges.
Three core elements of the API3 Oracle Stack
dAPI Price Feeds: Offers decentralized and tamper-proof price data for various cryptocurrencies, LSDs, equities, commodities and forex conversions to on-chain entities.
Quantum RNG (QRNG): Provides quantum-based random number generation for applications requiring high levels of unpredictability.
Airnode-enabled APIs: First-party oracle node that acts as a bridge between traditional API services and blockchain, providing a variety of off-chain data and computation results to smart contracts.
A focus on dAPI Price Feeds
Understanding the core features of API3’s Oracle Stack enables partners or builders to be more effective when engaging projects externally.
Please see this short animation introducing dAPIs: https://www.youtube.com/watch?v=wLZ4pyqAFuE
The following terminology covers the main features around dAPIs that should be understood by an affiliate.
Verifiably Decentralized: Data is served transparently on-chain from oracles hosted by the source. This enables protocols or DeFi users to independently verify if an Oracle is decentralized.
Aggregation Mechanism: Multiple nodes serve price directly to the chain where the DeFi protocol is operating. Native-chain aggregation prevents further single points of failure like bridges whilst optimizing transparency.
Data Sources: Nodes are operated by high-quality data providers that can be viewed on the API3 Market.
Update Frequency: Near real-time price reference data is maintained on-chain with customizable update and heartbeat thresholds.
Data Integrity: Cryptographically signed data is served to the chain within every oracle update, ensuring data integrity.
dAPI Operational costs: There are gas overheads associated with maintaining up-to-date prices to a chain according to Oracle deviation thresholds.
Developer Experience: dAPIs are easy to access through market.api3.org with a simple integration process.
What will protocols often ask?
Common questions can be found below with a suggestion on how to respond or hande these queries.
We need a new Price Feed to be deployed: Data feed deployments that are not listed on market.api3.org can be deployed. They need a request from the dApp to be made and it takes around 72hrs to deploy.
Long tail assets: These are often requested. Due to a lack of market depth, it can be difficult to provide these assets as an oracle feed.
Innovative oracles/data requests: Protocols may request a unique oracle or data feed for set up. API3 is able to explore this with a protocol, but it will be a longer-term initiative before an integration happens.
Additional Chain Deployments: dApps may seek the API3 Oracle Stack to be deployed to new chains. This is something we can co-ordinate with a dApp but it may take a couple of months to execute. Please note we can only deploy to EVM-compatible ecosystems.
Non-EVM Chain Deployments: Delivering custom solutions to new blockchains such as EVM nuances or new languages.
dAPI Operations Overview
When a DeFi protocol uses an oracle they have a few considerations within the price feed configuration. See an overview of these factors below:
Deviation threshold: An Oracle maintains price reference data on the blockchain that is updated when price moves and triggers an update. This is the threshold configuration of the price feed, that is often inbetween 0.25% - 1%.
Data Feed Verification: API3's Ensures data transmission integrity and confidentiality.
Redundancy Options: Multiple nodes and data sources for fault tolerance.
Monitoring & Alerting: Systems to track oracle performance and alert on anomalies.
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