Benefit description : API3 has been included in the “Huaxia Club 100” observation pool. Although there is no interest relationship for the time being, positions may be opened in the future, so there may be potential interest relevance.
The blowout development of Defi has brought the concept of oracle into people’s vision. The financial system of the entire Defi world can be roughly divided into: BTC, ETH as the basic collateral asset issuance (including anchored assets, synthetic assets, stable coins), such as Maker; and algorithmic stable coins. Loan agreement (Aave, Compound). Insurance agreement (Opyn, Cover) DEX trading platform (Uniswap, Sushi, Balancer, Curve). Financial aggregator (YFI, APY) wallets (MetaMask, Trust Wallet, MathWallet) oracles (ChainLink, Band, Nest, API3)
Before Defi broke out, the oracle was not well known as a separate project or conceptual block, and public chains often had their own oracles. But the oracle does not only serve Defi, and it is not only the secondary market price that can connect on-chain and off-chain. It can be said that for all off-chain data to be on-chain and used by various Dapps and smart contracts on the chain, oracles are needed as middleware. Among them, the natural attributes of Defi create an excellent opportunity for the “landing” of the oracle. Regardless of whether BTCETH is used as collateral to issue on-chain assets or for on-chain lending, it is necessary to obtain an off-chain price (centralized exchange) to calculate the real-time market value of the collateral and to execute smart contracts. For a time, the oracle became an indispensable part of the Defi world. Even an imaginative prophet may not expect that in a short period of time, the entire Defi world has locked up more than 20 billion US dollars of digital assets.
The so-called tree attracts the wind, a large number of assets come to the chain, and smart contracts have become the building blocks of the Defi financial building. The glue connecting these building blocks is an invisible oracle. “Price manipulation” is a morally derogatory term, but with controversy, it also indicates that it may bring huge benefits. This is more obvious in the financial world constructed by Defi. For example, the tens of millions of dollars in asset liquidation on Compound, or the recent vicious lightning loan attacks. Most of these are triggered by manipulating the price of the oracle. One of the basic flaws of existing oracle solutions is the attempt to establish and maintain a parasitic connection to the data source.
Taking Chainlink as an example, the participating roles mainly include data source providers, node operators, smart contract parties, and oracle operators. To obtain data, a smart contract needs to access the oracle operator, and then collect the data source through the node operator above. In other words, in the traditional oracle project model, the data source provider does not directly provide the data to the smart contract, but first provides it to the node operator, and then the aggregator averages the data of these node operators or Other methods of screening are then provided to the smart contract. In the traditional oracle model, there are several problems:
(1) The data source provider has not received most of the rewards for data creation. Taking Chainlink as an example, from August to October, the top three node operators received a monthly subsidy of 100,000 U.S. dollars, and the monthly fees paid by the node operators to the data source provider were generally between 100-400 U.S. dollars per month. between.
(2) Lack of transparency . Since there is a layer of node operators between the oracle operator and the data source provider, it is difficult for the oracle and the user to know the cause of the problem when the smart contract user suffers a huge loss due to a problem with the provided data Who is the provider of the data source. As a result, manipulating the price of the oracle machine to obtain huge profits has become a matter that is difficult to trace back. When there is a problem, there is a need to solve the problem, and API3 is one of them. This is also the main reason to pay attention to API3. In response to the current problems encountered by traditional oracles, API3 provides its own solutions:
API3 allows APIs (data providers) to operate their own oracles without having to pass through the middle chainLayer, LinkPool and other node operator roles. In order to realize such functional scenarios, API3 has designed a core component similar to API gateway “Airnode”, which means “air node”. The API provider only needs to perform some DNS configuration like setting up an API gateway on the cloud provider, and it can achieve the purpose of directly providing data to the smart contract. It is deployed once and does not require any further maintenance. Airnode can be understood as a completely serverless oracle node, specifically for API providers (data providers) to operate their own oracles.
Since data providers directly provide data for smart contracts, most of the rewards generated by data will also be given to data providers, which is in line with the beautiful vision of the Internet of Value. Of course, correspondingly, the data provider will also assume the responsibility for the authenticity and validity of the data. The greater the responsibility, the greater the benefit. Of course, the design concept and model of the API3 project are not just based on imagination.
The API3 team had previously operated the Honeycomb dot market, the largest node on ChainLink. They operated 6 ChainLink nodes at the same time, all maintaining a very high response rate. It is the focus on the oracle market and long-term contact with data providers and node operators that gave birth to the concept of the API3 project. The two founders of API3: Heikki Vanttinen is mainly responsible for the development and operation of BD and the project. Previously, he was the CEO of CLC Group, a company that focused on the development of decentralized oracle machines. He previously developed the Honeycomb API market. Burak Benligiary is the technical leader of API3, and previously the CTO of CLC Group and Honeycomb API.
In a sense, Honeycomb is the prototype of the API3 project. According to the disclosed information, there are currently about 20 people in the entire API3 project team. At the capital level, it has received investment from institutions such as Pantera Capital, Digital Currency Group (investment institutions under the gray parent company), CoinFund, Plaeholder, and Accomplice. According to the disclosed token distribution, the circulation in the first year is about 20 million. From an investment perspective, API3 is worth paying attention to:
(1) The API3 team’s long-term hard work in the oracle field will help it to undertake part of the upstream and downstream resources of ChainLink;
(2) The solution is highly innovative, whether the launch of the core product module “Airnode” can solve the problems in the traditional oracle field as desired;
(3) The trend of off-chain and on-chain integration of the entire blockchain, including Defi, will generate huge rigid demand for oracles in the future;
(4) Compared with the existing well-known target (ChainLink), the project valuation has a large gap, and the continuous improvement of fundamentals is expected to help the project valuation to catch up with the leading projects in the field;
(5) The token economic model makes the token highly relevant to the ecological development of API3 projects (the pledger needs to pledge API3 tokens to the pledge pool to obtain API3 DAO governance rights, and data providers need to pledge API3 tokens to become API providers, etc.). The risk points are mainly concentrated on: whether the core product module “Airnode” can be launched as scheduled and can better solve the core problems faced; the continuous iteration of the traditional oracle project at the head and the improvement squeeze the future growth space of the API3 project; blockchain The uncertainty of the overall market. Others: The total amount of API3 is 100 million, and the distribution is as follows:
25 million ecological funds 10 million partners and contributors 30 million founding team 20 million public offering (completed, cost around $1.06) 10 million seed round financing (price is $0.3 each) 5 million pre-seed round financing lock-up period and The unlocking situation is as follows: 30 million of the founder, locked for 6 months, and then linearly unlocked 10 million of partners and contributors in two years, locked for 6 months, and then linearly unlocked in two years, and 10 million of the seed round is unlocked linearly in two years The 5 million points of the Pre-seed round will linearly unlock 20 million of the public offering in two years, and the 25 million of the ecological fund without lock-up period will be determined by DAO.
