When it comes to solving the so-called “oracle problem,” or the way blockchains are connected to outside data sources, we can do better.
So says API3, a project building a transparent methodology for marrying blockchains to the APIs of data providers, which really means providing an alternative to Chainlink, the decentralized oracle service with something of a monopoly in the world of data feeds and smart-contract blockchains.
Announced Thursday, API3, which promises a decentralized API (dAPI) network, has raised $3 million in a private funding round led by Placeholder and with participation from Pantera and Digital Currency Group (which is also the owner of CoinDesk).
Because blockchain nodes are consumed with the business of reaching consensus, they must obtain outside information via oracle nodes, a sort of middleware between the ledger and the API of some data provider. According to Heikki Vänttinen, co-founder of API3, this intermediary function is handled by rent-seeking middlemen who run nodes on Chainlink, which in turn operates an opaque system of governance.
A better solution is to allow API providers themselves to run their own nodes, said Vänttinen. That way, the process of governing the curation of data feeds can be done in a transparent and decentralized manner.
“We just saw some shortcomings in the way they [Chainlink] basically operate their data feeds on the oracle network as a whole,” said Vänttinen, who was