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An API (application programming interface) is an essential tool for communication between different software applications. It serves diverse purposes, including automating tasks, managing web content, receiving data from external sources and much more. Blockchains need APIs to help source data from the real world, but smart contracts, which are required to operate decentralized applications (DApps), don’t have direct access to APIs, as they only operate using on-chain data.
This data disconnect has prompted the creation of bridges known as oracles that connect smart contracts with APIs to acquire external data. However, many existing oracles are centralized, which makes them vulnerable to compromise. This can affect smart contracts on blockchains as well. The challenge of ensuring the reliability and security of oracles is popularly referred to as the oracle problem.
API3 solves the oracle problem by introducing Airnode, a web3 API gateway that directly connects Web APIs to decentralized applications, thus creating decentralized APIs (dAPIs). To see what this means for the future of web3 oracle design, let’s learn more.
Key Takeaways:
API3 introduces an innovative approach to solving the oracle problem by creating decentralized APIs (dAPIs), which allow smart contracts on-chain access to external data feeds.
API3 leverages its Airnode technology to provide serverless cross-chain connectivity to over 120 price feeds across several blockchains.