Smart contracts frequently face challenges in accessing reliable data, and application programming interfaces (APIs) have emerged as a potential solution to address this issue.
API3 aims to facilitate the construction, management, and monetization of decentralized versions of APIs on a large scale. With the increasing role of blockchain technology in various sectors, including decentralized finance and supply chain management, the API3 team emphasizes the growing importance of smart contracts delivering "timely, reliable real-world data."
Introduced in September 2020, the API3 whitepaper identified the primary issue associated with APIs—connectivity. Currently, smart contracts lack a direct connection to APIs for accessing the latest data, leading to the rise in popularity of oracles as an intermediary solution.
While oracles have mitigated the problem to some extent, the industry now grapples with the "Blockchain Oracle Problem," involving increased costs and centralization. API3 seeks to overcome this challenge by enabling API providers to operate their own nodes.
The API3 token was launched in early December following a successful token sale that generated millions of dollars.
