API3: DeFi Data Feed Service Becomes A DAO

API3 is a service that provides all the data feeds to blockchain-based smart contracts. It is becoming a DAO i.e. decentralized autonomous organization. This is a democratized system of decision-making with the help of cryptocurrency and blockchain technology.

On Thursday, it was announced that this API3 DAO data feed service contains the startup’s treasury that is worth close to almost $100 million. This amount is extracted from its token sale. This sale was held at the end of last year. There, it was composed of stablecoin USDC worth $23 million. And also 25 million API3 tokens valued at $2.75 per piece at the time of writing. All the blockchain projects like to take up some level of decentralized governance. Also, it is a very good reason to issue a token. However, DAOs do this completely and thoroughly. They hand over the project’s tasks, control, and directions to treasury holdings to the voting power of all the token holders rather than giving it to just a small group of governing individuals.

API3 has its Authoritative DAO. It has been built with the help of the Aragon DAO creation platform.

How Does This Work?

Its working is pretty simple! All the API3 token holders will get one vote per token. It will be staked in the smart contracts of DAO. This is the place where these tokens will be locked up for a year. This will allow the voters to share in their staking rewards. This will be starting at 47.12 APY and will adjust downwards as their collateral targets are met. This whole process was explained by Heikki Vänttinen, the co-founder.

The rapid and continuous growth of DeFi (decentralized finance) nowadays has really proved to play a significant role in API3. Many people might be unknown of the fact but because of API3’s use cases, giving all the blockchain smart contracts the right and useful data has become a growing business. The company says it wishes to create a more transparent and accountable data oracle option as compared to Chainlink. This is to become a market leader in decentralized finance data feed provision.

API3 project has its aim clear. It is to provide people with a kind of decentralized insurance that is against oracle failings. An example of such failings is when a critical data feed falters. Or maybe the wrong data finds its way into the DeFi platform then users can lose money.

Vänttinen Said

In an interview, Vänttinen said, “We are going to be providing collateral for an insurance product that’s going to be available to the data feed consumers. So, if a data feed goes down, the consumer of that data feed will be able to file a claim to the insurance and then get compensated from the pooled tokens if the claim is valid.”

It is said that several DeFi and decentralized insurance alternatives like the famous Nexus Mutual platform include oracle failings in the repository of the risks recovered. However, Heikki Vänttinen pointed out his argument that API3 DAO’s insurance provision is much better aligned considering the project’s overall goals.

He also said, “All the people governing the API3 DAO are directly incentivized to keep the data feeds running as they should and maintain a high quality of operations for the DAO. Because that means there won’t be any outages or malfunctions that would lead to them getting slashed from the insurance pool.”

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