API3, Chainlink’s aspiring killer, raised $3 million through a round of funding led by Placeholder together with Pantera Capital, Accomplice, CoinFund, Digital Currency Group and Hashed.
This is the initial investment round in which 10 million API3 tokens were sold for $3 million.
These tokens have a 2-year linear maturation programme and account for 10% of the total supply of 100 million tokens.
They are also the governance tokens of the DAO of API3, the project’s native token that gives its owners the right to take part in the governance of the API3 ecosystem, through the DAO of the same name, as well as allowing staking.
The API3 project aims to solve in a more transparent way the problem of providing decentralized smart contracts with secure data through API, i.e. to compete directly with Chainlink, the current leader in this market.
The ambition to replace Chainlink seems a bit daring at the moment, but thanks to the 3 million dollars raised, it is possible to imagine that they will be able to provide the market with new competitive solutions.
Why API3 may be the Chainlink killer
According to API3’s co-founder, Heikki Vänttinen, Chainlink has an opaque governance system, while API3’s DAO wants to be completely transparent.
In addition, the existence of intermediaries who do business by managing the nodes that acquire data from the original API, to provide it to oracles, could be a problem according to Vänttinen, so much so that API3 aims to have them managed directly by the original API providers, thus eliminating intermediaries.
“We just saw some shortcomings in the way they [Chainlink] basically operate their data feeds on the oracle network as a whole. The core team is this sort of centralized black box for the data feeds, deciding unilaterally which nodes get to serve which data feeds and also which APIs those nodes serve data from”.
Chris Burniske of Placeholder added:
“Crypto’s largest oracle system by network value, Chainlink, is composed of data-reselling middlemen, where the source and quality of data are suspect. While heavily marketed, Chainlink isn’t well enough designed or maintained to remain a long-term solution for crypto or DeFi’s information needs, and those that rely on Chainlink do so at their own users’ risk”.
In reality, some Chainlink data providers actually already run their own nodes, and because their system allows them to sell their data to multiple blockchain providers, Chainlink users have access to a wider selection of data providers.
When the news came out, the price of Chainlink’s LINK token does not seem to have suffered any loss of value in the markets.