API3’s New Push Oracle Solution Improves Security and Transparency of Data Brought On-chain
Earlier this year Polygon zkEVM launched with an ambitious goal of scaling DeFi and driving adoption by leveraging the power of zero-knowledge proofs while ensuring EVM equivalence. Since April 2023, API3 has been providing first-party oracle services to Polygon zkEVM. With the recent introduction of managed dAPIs on the API3 Market, builders can now access multi-source, decentralized data feeds (dAPIs) delivered by first-party oracle nodes with native-chain aggregation.
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“It’s very exciting to see API3 deploying on Polygon zkEVM, enhancing the DeFi ecosystem with an innovative push oracle solution. The integration of managed dAPIs with Polygon’s scalable infrastructure marks a significant step towards a more transparent and secure future for decentralized finance.”
Lending protocols and perpetual DEXs are core layers of the DeFi economy. These protocols require real-time market data which must be brought on-chain by an oracle. The vast majority of DeFi apps – worth tens of billions in TVL – continue to use push-type oracles to secure their TVL. The current blockchain oracles require protocols and chains to pay high fees for solutions with limited to no source transparency or introduce additional vulnerabilities due to having to modify pull oracle solutions.
In order to address these challenges, API3 designed a new push oracle solution around first-party architecture. This solution allows DeFi protocols that are currently using push oracles on other EVM chains to quickly and easily migrate to Polygon zkEVM, allowing for the rapid adoption and scaling of DeFi to the next billion users.
A Next-Generation Push Oracle Solution
API3’s novel push oracle design is built around the Airnode first-party oracle node, which removes rent-seeking middlemen and offers a more secure and efficient method of bringing real-time market data directly on-chain. With native-chain aggregation and multi-source data feeds, developers can leverage more reliable data, reducing downtime and improving data integrity.
Unlike oracle designs that involve third-party oracle node operators, API3’s first-party push oracle leverages data directly from the source. The oracle nodes are operated by the data providers themselves, bringing cryptographically signed data onto the blockchain. The push oracle design can be verified down to the API parameter and sets a new standard for data source transparency.
Push oracles have been a key solution for DeFi applications like Aave, Compound, and various DEXs. But with API3’s new push oracle, the game is changing. This new model aligns the incentives for data providers, networks, and dApps. The launch of API3’s managed dAPIs marks a new standard in the industry, by offering direct access to an assortment of real-world data, including crypto, forex, equities, and commodities straight from the source.
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Serving the DeFi ecosystem with DAO-managed oracle service
Developers have already been using dAPIs on Polygon zkEVM as self-funded data feeds, but now have access to multi-source, aggregated data feeds served directly on-chain by leading data providers.
QuickSwap Perps is currently utilizing dAPIs to ensure accurate pricing, as well as Dovish, a perpetual swap protocol. MantisSwap, a DEX specializing in the trading of stable assets, currently uses dAPIs to enhance their protection mechanism for stablecoin depegging, which underscores the role of the improved security characteristics of dAPIs for DeFi applications.
Tropykus, a lending and borrowing dApp that forked from AAVE V2, leveraged self-funded dAPIs to quickly and easily launch on Polygon zkEVM shortly after it launched. By requiring minimal changes to battle-tested code, dAPIs give developers a first-mover advantage with the potential of rapid deployment on new networks.
Building the Future of Decentralized Finance on Polygon zkEVM
The API3 Market provides an easy way to browse, access and manage dAPIs. Developers looking to utilize managed dAPIs need to read the proxy contract address of the associated data feed, which is imported to the dApps contracts. From the proxy address price reference data is supplied to the smart contract function.
Managed dAPIs are changing the way dApps use real-time market data. Delivered as a managed service, they abstract away operational factors like gas management, maintenance, and monitoring.
As technological innovations continue to improve the core infrastructure necessary for scaling DeFi to the broader world, the collaborative approach between Polygon zkEVM and API3 represents the crucial role oracles have in scaling Ethereum. The next generation of blockchain oracles will provide improved security and transparency with first-party oracle solutions. API3 DAO looks forward to exploring the possibilities of decentralized finance as the potential of smart contracts is fully realized.
“It’s very exciting to see API3 deploying on Polygon zkEVM, enhancing the DeFi ecosystem with an innovative push oracle solution. The integration of managed dAPIs with Polygon’s scalable infrastructure marks a significant step towards a more transparent and secure future for decentralized finance.”
– Jack Melnick, Head of DeFi BD, Polygon Labs
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