Swap API3 at the Best Rate

What is API3?

API3 is the governance and collateral token of the API3 project, a decentralized oracle effort with a specific thesis: data should come from first-party oracles, meaning API providers running their own nodes, rather than from third-party middlemen who resell other people's data. The project's dAPIs are on-chain data feeds aggregated from those first-party sources.

The token launched through a public distribution on the Mesa decentralized exchange between 30 November and 14 December 2020, offering 20 million tokens, 20% of the initial supply, with proceeds and unsold tokens going to the DAO treasury.

How API3 works

API providers run Airnode, an open-source, serverless oracle node that wraps an existing web API and signs its data with the provider's own key. dAPIs aggregate those first-party feeds, and dApp developers buy access to them through the Api3 Market. With no middleman layer, the source of every data point stays identifiable and accountable.

Since July 2024 the stack also captures oracle extractable value. The OEV Network, a rollup built on Arbitrum Orbit, auctions the right to execute specific data feed updates, such as the update that triggers a liquidation, and Api3's documentation states that 80% of that auction revenue is paid to the dApps that generated it as OEV Rewards.

API3 supply and tokenomics

The initial supply was 100 million API3, and the token is inflationary by design. Weekly staking rewards started at a 75% annual rate and decayed exponentially to 2.5% per year by the end of year five, the level the whitepaper fixes in perpetuity unless governance changes it. Rewards vest for a year after they are earned, keeping governing stakers exposed to the project's longer-term outcomes.

Working the other direction, the design burns or time-locks tokens in exchange for services, and staked tokens can be seized to pay service coverage claims. With the decay schedule finished in late 2025, issuance now sits at the 2.5% floor.

Who builds API3

API3 was founded in 2020 by Heikki Vänttinen, Burak Benligiray and Saša Milić, the authors of its whitepaper, after earlier work on the Honeycomb API marketplace. The legal entity, API3 Foundation, is a Cayman Islands foundation whose actions are directed by the DAO, and development happens in public on GitHub.

How API3 is governed

Governance is direct rather than delegated: anyone who stakes API3 into the DAO pool receives voting power over proposals, with no separate council in the design. The same staked tokens are the protocol's insurance capital, which the whitepaper argues aligns voters with the system's safety: govern badly, and your own collateral pays the claims.

What people use API3 for

API3 is a working token: each of its designed uses routes through the single DAO staking pool rather than through passive holding.

• Stake in the DAO pool to vote on proposals and earn the weekly inflationary rewards.
• Back service coverage, with staked tokens collateralizing claims from dAPI users.
• Hold unstaked API3, which carries no vote, no rewards and no claim exposure.

API3 risks and considerations

Staking API3 is insurance underwriting: if a dAPI malfunctions and a service coverage claim is honored, the staked pool pays, so rewards come with a genuine liability. Inflation also penalizes passive holders, because non-stakers are diluted at the schedule's floor rate while stakers are compensated.

The oracle market is a hard competition. API3's first-party model competes with far larger incumbent networks, and its OEV revenue thesis depends on lending protocols adopting Api3 feeds. The token's value tracks whether dAPIs and OEV Rewards keep winning real integrations, not the elegance of the design.