Chainlink is among the most prominent crypto projects that have secured a place for it amongst the adults thanks to the technology it provides, which is providing external data to blockchain networks using Oracle technology.
And apparently, there is a promising competitor that wants to crowd out Chainlink and take its market share.
The startup named "API3", a new provider of Oracle technologies, is hoping to take a stake and compete with Chainlink.
The startup "API3" announced last Thursday the closure of an initial financing round of $ 3 million led by "Placeholder".
The round of financing has attracted the participation of "Digital Currency Group" and "CoinFund".
The Funding Round shows that despite Chainlink's dominance, the Oracle problem is still far from resolved, and there is still much debate over how best to bring real-world data into decentralized apps.
Oracle technologies make it possible to provide external data to blockchain-based applications, which usually require more information to run more smoothly.
Since most of the code for these applications is executed automatically via smart contracts, it is crucial that the external data be reliable and resistant to tampering.
In networks like Chainlink, many different users run nodes that collect asset prices and other data from the original source, such as a data exchange or analysis agency.
These users charge for copying the data to prevent tampering with it, but in doing so, they increase the data price and network complexity.
The startup "API3" aims to use "API" providers, eliminating middlemen and reducing costs by providing aggregated data directly from first-party data sources.
Mr. Heikki Fantinan, founder of API3, explained to the source in detail the matter as follows:
We'll make it possible to take advantage of the reputation of off-chain data providers as collateral, which is only possible with the first-party Oracle we propose.
This eliminates all the security risks of the third-party Oracle node layer and makes the first-party Oracle as trustworthy as the API that gets its data.
API3 will allow first-party data providers such as stock exchanges and credit reporting agencies to run so-called “airnodes,” applications that run on the same cloud hosting platform that hosts their API services.
Airnodes are open source software that transfers data from first-party providers.
Airnode will be created and maintained by a decentralized autonomous organization (DAO), with stakeholders sharing the responsibility for managing and maintaining the API3 framework.
API3 should function as a simple API gateway.
Meaning, reliance on many external parties will be reduced thanks to the API3 data provided to ensure data integrity without using a wide network of intermediaries who provide data assurance.
Chris Bornesky, founder of "Placeholder", which has invested in "API3", said:
While API3 represents a new effort, the engineers, builders, and community members behind the network have been pursuing the Oracle general purpose cryptocurrency problem for years.
With this experience comes knowledge about what works and what does not work in current systems.
For them, it is not about Oracle but more about APIs, and this distinction makes a big difference in transferring all the world's data to the blockchain at a low cost.
In addition to "Placeholder", several venture capital firms such as Pantera Capital, Digital Currency Group, Hashed and others have joined in the API3's initial funding round.
With high-profile investors around the new startup helping them fund a new Oracle solution, existing Oracle service providers such as Chainlink may need to keep an eye on their emergence as competition looks set to intensify over who will be the preferred external data provider.
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