What is API3?
dAPI (decentralized application programming interface) represents a highly established standard in software and app development. API3 provides an approach for the world’s information to be injected into blockchain applications with the ease and standardization provided by API connectivity. An Application Programming Interface (API) is completely defined and perfectly documented protocol that permits web and mobile apps to communicate with one another by exchanging data and services. APIs are the backbone of the new digital economy which are serving as a foundational element of digital solutions and the focal point of the API Economy. Although dAPIs are similar to typical APIs based on functionality, legacy APIs are centralized and not essentially compliant with blockchain technology. Applying an API as the channel, online businesses nowadays can offer their data and services as monetizable service modules, that developers are able to integrate into their applications. This, in turn, gigantically enhances the efficiency of building software either in terms of cost or build-time.
API3 is an application programming interface (API) service where it exptends the Web API service to the blockchain by controlling smart contract compatibility difficulties encountered by traditional APIs. As a result, API3 is established as the decentralized version of Web APIs for the blockchain space and is termed as “decentralized API” (dAPI).
dAPI platforms such as Kumuluz have brought a number of core technology innovations that allow developers to make really decentralized blockchain applications and digital products in the rapidest way possible without any compromises in scalability, performance, security, resilience and decentralization.
What is the Oracle Problem and why are they related to Smart Contracts?
While the use-cases for blockchain technology have had evolutions across from the past decade from cryptocurrencies like Bitcoin, to smart contract platforms like Ethereum, to the recent explosion in DeFi (Decentralized Finance), the evolutionary line planned into these developments has provided a rather clear way for the future use-cases of decentralized technologies.
The ”oracle problem” refers to smart contracts’ incapability to get data which is not already available on the blockchain. This suggests that the smart contracts driving these apps can’t directly access APIs from the blockchain where the contract is stored owing to the unique consensus-based security assurances gained from employing a decentralized network of nodes as the application platform. A solution is required that permits smart contracts to access API data while retaining the underlying system’s security certainty to the maximum extent possible without adding new attack surfaces.
Decentralized API services solve this problem by managing variety of data providers since they are based on blockchain. The difference between dAPIs and existing decentralized oracle solutions is that, in contrast to current solutions, dAPIs include the APIs that underpin the data feed in the context of the solution.
Obviously, nowadays we have reached to a reality where smart contracts and decentralized applications can be used to increase efficiency, reduce middlemen and expenses, and provide enhanced transparency in hundreds of real-world applications through dozens of legacy industries. Additionally, while the first step of this evolution towards real-world-connected decentralized applications has been in the realm of finance, we have only just begun. Moving beyond DeFi, smart contracts are poised to change all industries from insurance to supply chain management to gambling.
What are the advantages of API3?
Although current Web APIs can provide a range of services and solutions, they still have some brokers as mediators. Existence of the middlemen contradicts the basic concept of decentralized in dAPPs. Middlemen, also, increase the risk of insecurity since they expose the app to attacks. A centralized API is easier for hackers to attack because they only require to breach one node before they can access all of the data. In contrast, with a decentralized API, it’s harder for hackers to get into any one node because they’d have to breach every single one of them at once. Obviously, API3, by removing these go-betweens can decrease fees.
In traditional API solutions, the oracles basically blur the information source to avoid accountability claims. API3 by incentivizing economically attract the providers’ interest. To providers, it is crucial to raise demand for their data. So, the API3 project intends to foster cooperation from variety of API providers with a reputation for supporting their off-chain businesses to ameliorate decentralized application (DApps) development.
Centralized APIs vs Decentralized APIs
Considering the difference between centralized and decentralized APIs, it’s significant to comprehend that the difference is not just about location.
In a centralized API, there will be a single point of failure, which means if an issue comes up with that particular server or database, it can collapse the entire system. A decentralized API will have multiple points of failure, which means if trouble occurs to one node/server/database, other nodes/servers/databases can still continue working.
In a decentralized platform, the API gateway forwards requests to other API endpoints. This may be the server side of an app or a public API of a trade associate of the app. In operation, the API is responsible for ensuring that the proper protocol, security, and data transformations are deployed.
Applying a centralized approach, the data is acquired and stored in one location, which is a single data store that is part of the API platform. This central data store guarantees near real-time bi-directional synchronization with the associated backend technologies and business partners via the use of asynchronous connections. This results in API requests being approached directly to the central data store in this condition.