First Party Oracles - API3

Airnode

API3's Airnode product offers a first-party oracle concept that promotes decentralization while using first-party API data feed providers. While first-party oracles like API3 does use first-party API data feed providers, the network is designed to be decentralized and to incentivize data feed providers to act in a decentralized and trustless manner.

The token-curated registry (TCR) model allows the community to vote on the quality and reliability of APIs, promoting decentralized decision-making.

Unique Features

The process of deploying and maintaining all of the smart contracts on the traditional oracle system (The case with Chainlink) is something that can be removed with the first-party oracle design, as is the case with data validation and publication by the network of node operators as well.

The Airnode RRP (Request-Response Protocol) replaces this need for two sets of oracle agents to sit between the smart contract and data. Instead, a single smart contract forwards price requests to an on-chain protocol eliminating the need for multiple smart contract deployments/management and expensive node operators. This enables the direct transfer of data from a data provider to a smart contract. The Airnode host is managed by individual data providers and wakes up at predetermined intervals to check for pending requests which are fulfilled regularly.

This elimination of third-party intermediaries reduces the potential for errors or manipulation of the data. Along with it, any misreporting of prices will only affect a small number of users and can be quickly rectified. This system also mitigates the risk of wiping out the entire blockchain network's DeFi ecosystem, which is a possibility with third-party oracles.