Safe, Decentralized, Reputable API’s

Analysts:

Chris Garcia & Aaron Rudder

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1/18/2022

Presentation Outline

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1. What is the Problem API addresses?

6. Tokenomics

3. The Competition

4. Team, Founders, VC Funding, Audits

5. Stats & Integration

7. Fund Recommendation

2. What is API3?

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What is the Problem API3 Addresses?

First Off, what Is an “API”?

• Application Programmable Interface
• Software Intermediary that facilitates information flow
• Salesforce, Expedia, and Ebay make most their revenue from API’s, and for all companies that provide API’s, it averages to be 25% of their revenue

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The Problem

• API providers are typically not crypto-savvy
• Creating an oracle, or hiring an oracle node operator are difficult and expensive
• No easy way to link API providers to the crypto ecosystem

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The Problem Cont’d

• All other projects (LINK, BAND, etc) use 3rd party oracles which have:
• Vulnerability (ex: Sybil Attack)
• Middleman Tax
• Expensive (& ineffective) Redundancy
• Lack of Transparency

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Vulnerability (Sybil Attack)

• Multiple Identities (thru collusion or fabrication) can manipulate outcomes
• Even build record of honesty, then skew data when economically favorable
• Therefore fees are needed to align incentives….

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Middleman Tax

• …fees are now needed to make it economically favorable (by a lot) always to act honestly
• This gets expensive
• Basically a “tax” that is avoidable with 1st party oracles

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Expensive (& ineffective) Redundancy

• Many oracles are needed to ensure data is “accurate”

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• This is expensive, slow, and largely ineffective

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Lack of Transparency

• Difficult to assess where data originates
• Thus, number of oracles doesn’t necessarily correlate with number of unique data points
• Overall quality of data is then uncertain

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What is API3?

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API3

• Facilitates the connection of API providers to the blockchain through 1st party oracles

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• This means API providers send data to their own oracles via API3

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• Introducing the “dAPI”

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What is a “dAPI”

Decentralized API

• Multiples APIs, referring to both a technical interface and a service an IRL business provides
• 1st party oracles
• Decentralized governing entity to oversee oracle network

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Mechanics

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Addressing the Issues

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• Data is verifiably from the “source”

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• Conservatively estimated 50% more gas-cost efficient

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• Eliminates multiple attack surfaces for Sybil attacks

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“Airnode”

• Fully serverless oracle node for API providers to operate their own oracles
• No specific know-how - “set and forget”
• No day-to-day maintenance
• Proportional cost structure
• Node operator doesn’t deal with cryptocurrencies

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The Competition

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The Two Systems

Current API Structure

API3s Solution

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Chainlink ($LINK)

• Original Oracle solution

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• Strong Brand Recognition

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• 3rd party oracle network that has already had governing failures and attacks

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Band Protocol ($BAND)

-Faster & more efficient than much of the competition

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-Cross-chain

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-Extremely simple integration

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Team, Founders, VC’s, Audits

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Background

Funding

-Two funding rounds totaling 3 million dollars

-12 Large capital investors

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Team

-Co-founders: Heikki Vänttinen & Burak Benligiray

~9 employees

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Seed Backers

Extremely competitive and selective funding round

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Audits

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June ‘21

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April ‘21

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June ‘21

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Oct. ‘21

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April ‘21

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June ‘21

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All Findings Resolved

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Stats & Integration

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Where to buy?

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New Large Partnerships

Cudos

-Cloud computing network

-Layer 2

-Mainnet launching in a month

Plasm

-Polkadot Chain

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ARK Chain

-Developer tool

-Built Simple

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New Large Partnerships Pt. 2

EEA Member (Enterprise Ethereum Alliance)

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Fantom

- Higher capacity transactions

- Faster transaction speed

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Glitch Chain

-Hong Kong Base

-Defi chain solution

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Tokenomics

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On Chain Insurance

Why?

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This unique aspect of on chain insurance provides financial incentives for dapp developers to trust the protocol

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Obvious Solution to data feed malfunction

How it Works?

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With limited access points for security breaches, API3 is confident in its security.

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Using KLEROS to facilitate the dispute resolution for claims.

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DAO has first ruling on filings/Kleros for escalated cases

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Token Governance

API3 is the native token of the project

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Gives token holders the right to take place in the governance of the ecosystem

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Shares of governance is earned through staking in insurance pool

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Token Staking

• Staking API3 at the pool grants voting power at the authoritative DAO, which will have full control over the project.
• Staking API3 at the pool yields weekly rewards in an automatic and compounding way.
• The DAO will be able to utilize the staked tokens as collateral for the insurance products it will provide to secure its services.

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Aligning Incentives

Insurance

• Staked tokens are voting power, but also the collateral for dAPI failure
• This incentivizes stakers (and hence voters) to engage and vote to the benefit of keeping data-feeds operational

Staking

• Can only withdraw staked rewards after 1 year
• Rolling nature of staked payouts incentivizes stakers (voters) to act in a way that benefits the DAO in the long run (rolling 1 year time-frame)

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Value Drivers

-Extremely low market cap compared to competitors

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-Strong growth of web3 and the only truly decentralized API/oracle network on-chain

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-Niche decentralization market

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“provide superior data transparency all the way to the factual data source level, compared to existing decentralized oracles, which do not consider the data source API to be within the scope of their solution.” -Vanttinen

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Current Circulation & Stats

Market Cap: $134 million

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Fully Diluted Market Cap:

$378 million

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Volume/Market Cap: .056x

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Circulating Supply:

36,907,810 API3

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Chainlink & Band Protocol

Market Cap: $11.3 billion

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Fully Diluted Market Cap:

$24.2 billion

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Volume/Market Cap: 0.084x

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Circulating Supply:

467,009,549 LINK

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Market Cap: $188 million

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Fully Diluted Market Cap:

$535 million

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Volume/Market Cap: .115x

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Circulating Supply:

35,191,821 BAND

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$LINK

$BAND

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Fund Recommendation

Fund Recommendation

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Current Price:

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$3.62

Action:

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Buy with 0.25 ETH & Stake

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Questions?

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