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API3 new public chain, targeting the neglected OEV

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API has recently increased by 100%. Please make your own investment decisions based on your own risk capabilities.

Original Title: "API3 New Public Chain, Targeting the Overlooked Billion-Dollar OEV"

Original Author: Ri Yue Xiao Chu

1) API3 is an innovative first-party oracle that announced the launch of OEV's zk Layer2 yesterday. OEV is a subset of MEV, referring to extractable value related to oracles. When the oracle provides the latest price to the Dapp, there will be opportunities for liquidation and arbitrage of some assets. API3's Layer2 specifically captures the value of OEV and feeds it back to the Dapp to enjoy the benefits.

2) This is mainly due to the fact that API is a first-party oracle. In other words, API3's oracle data does not require third-party aggregation and relay, but is directly provided by the data source. This is achieved through the core component Airnode, which allows API providers to easily run their own oracle nodes and publish data sources (dAPIs) directly to any dApp interested in their services without intermediaries.

3) The circulation of API3 is 100 million, of which 65.54 million are in pledge. There are 13.86 million in exchanges, and according to on-chain investigations, the Binance wallet has had the highest net inflow of 760,000 in the past 7 days. The largest outflow is from the pledge address, with a total of 560,000. However, compared to the total amount of pledges, it is less than 1%. It can be said that the sudden surge in the past two days did not result in severe selling pressure.

The recent increase in API has been 100%. Please make investment decisions based on your own risk tolerance.

1.API3 Introduction

API3 is an innovative project aimed at reforming the blockchain oracle field. Its core goal is to solve the problems of existing third-party oracles through first-party oracles. API3 achieves this through its Airnode technology, with nodes hosted in the infrastructure of API providers. This means that oracle data does not need to be aggregated and relayed by intermediaries, but is provided directly by first parties. This approach aims to improve privacy, cost efficiency, source transparency, and more in data transmission. Importantly, there is no need for cross-chain bridges as intermediaries to prevent frequent hacking incidents.

Project's main features and highlights

1. First-party oracle: API3 uses Airnode to allow API providers to directly host oracle nodes, improving data transparency and credibility.

2. Privacy Protection: The API provider operates the oracle on their own, and third parties cannot observe the original data processing of the API, thus significantly improving privacy protection.

3. Cost efficiency: By reducing intermediate links, the cost of data provision is reduced, and the overall efficiency of the system is improved.

4. Source Transparency: On-chain visible data sources ensure transparency and credibility of data.

2.Airnode

Airnode is the core component of the API3 project, which allows API providers to easily run their own oracle nodes without intermediaries and directly publish data sources (dAPIs) to any interested decentralized application (dApp) on the chain. The design philosophy of Airnode is to provide API providers with almost zero maintenance deployment capabilities. It aims to simplify the connection between APIs and blockchains, enabling smart contract engineers to easily access the required data and promote meaningful use cases.

Airnode is designed as a lightweight wrapper for Web APIs, enabling communication with smart contract platforms without incurring any overhead or token friction. Airnode is designed based on the "set and forget" principle, requiring no specific operational knowledge and possessing excellent resistance to permanent downtime and operational intervention. Built on a pay-as-you-go service model, node operators only pay for node usage, providing API providers with the possibility of running oracles for free.

3.dAPI

dAPIs (Decentralized APIs) are a key component of the API3 project, which are on-chain data sources provided by API providers themselves. These data sources are constantly updated by first-party oracles using signed data, allowing dApp owners to read on-chain values of any dAPI in real-time. dAPIs consist of one or more beacons, sometimes referred to as first-party data sources, as they originate from first-party oracles. The core of dAPIs is connecting smart contracts to first-party data sources, providing higher security, cost efficiency, and scalability.

dAPIs are directly maintained and supported by the data owner, that is, the API provider, effectively eliminating the need for third-party intermediaries that other oracle solutions rely on. Its operation is efficient and flexible, and dAPIs are built on a pay-as-you-go service model, allowing API providers to run oracles for free and only pay once they start generating revenue. It has a standardized user-friendly interface: dAPIs have a standardized and user-friendly interface designed to abstract away technical implementation.

4.OEV Network

Oracle Extractable Value (OEV) is a subset of MEV that refers to extractable value related to oracle services. In DeFi applications, data provided by oracles is often used to determine asset prices, execute liquidations, or perform other critical functions. When oracles update the data they provide to smart contracts, these updates can affect the state of the DeFi market, creating opportunities for arbitrage or liquidation. When oracle updates occur, certain participants may attempt to extract value from market participants, such as liquidity providers. According to Flashbots' statistical results, the captured revenue of MEV can reach hundreds of millions of dollars annually.

OEV network is a zk rollup network customized with Polygon CDK, designed to capture all OEVs used in Dapps that use the API3 data source. OEV network is a specialized order flow auction platform that sells the right to execute specific data source updates for a specific Dapp to the highest bidder. The winner pays a fee when executing the data source update, allowing decentralized applications to immediately receive profits on their native chain. All of this operates as an adjunct to our regular data sources, meaning that decentralized applications using the API3 data source will be able to easily enable the OEV network and start earning profits.