Community Call Summary - July 8, 2021

List of speakers:

Burak - Co-founder

Ryan - Marketing Management

Ugur — Business Development

Andre — Development

What happens after the DAO launch? (Burak, Ryan, Andre, Ugur)

For the technical department of API3, the focus will lie on the development of the Airnode, ChainAPI and oracle solutions. On the business side, the team continues to talk to API providers, dApps and enterprises to introduce them to API3. These accomplishments will be communicated out by the marketing team.

Can we expect more partnership announcements? (Ryan, Burak)

Yes. The main purpose of API3 is to connect the off-chain and the on-chain ecosystems and partnerships are the foundation in this endeavour. Furthermore, API3 is integrating one project into another instead of projects being integrated into API3. The announcements so far have been mostly one-sided in that regard and are not very descriptive of what is actually happening.

What will happen with the 27m API3 tokens in the treasury? (Burak, Ugur)

This Information can be found in the Medium article “API3 Public Token Distribution Event”.

From now on, the remaining 25 million of this fund will be used to grow the ecosystem in various ways. Some of it has been used for partnerships already. Ultimately, the first version of the DAO will keep the entire treasury without touching it to let the assertive data make the decisions. That is the reason why almost the whole treasury is still available.

Even though the authoritative DAO allows staking, the treasury is empty right now. A gradual migration to the new DAO is planned for security purposes. The tokens of the first version will be transferred step by step to the new DAO while observing that it is running fine throughout the whole process. After a few months, everything will be transferred to it.

Once the treasury is moved, it is up for the DAO to decide what to do with it. There are various ways to use it, e.g. partnerships, token swaps, raising funds or making the treasury available for other cryptocurrencies.

What would you say is your mission statement? (Ryan)

This topic is touched quite a lot and in a decentralized organization, it is not always easy to come up with a simple mission statement because a lot of people with different personalities are involved. However, the fundamental mission is to connect web APIs to applications on Blockchain to unlock the tremendous potential of trustless applications that can interact with the real world. Basically, connecting the awesome ecosystem of web2 to the exciting ecosystem of web3. The Airnode of API3 is the bridge between those two.

When will the first fully functional product come out? (Andre, Burak, Ryan, Ugur)

API3 is building an infrastructure to establish an ecosystem rather than just launching a product. However, these achievements are perhaps less tangible and more abstract, which might leave some people confused and lead them to this question.

Technically, you could argue that the first fully functional product came out last month as the Airnode was being actively used in the Sovrython hackathon. Furthermore, the DAO could be seen as a fully functional product as it provides a lot of value. The same logic applies to the Airnode which is a software that allows users to provide oracle services. Eventually, it is a matter of semantics.

At the moment, the Airnode is running very stable but it is hard to give a timeline of when it is expected to be ready. The team is currently working on the 0.1.0 release.

How is ChainAPI progressing? (Andre, Burak)

The idea of ChainAPI and its purpose arose a few months ago but there was no team that was able to build it nor to design it. Therefore, the initial progress was slow. It was hard to find developers and even harder to hire good developers who work well together. Finally, it took some time to scale up from zero to one. Right now, there are four full-time developers that are working on ChainAPI. Two are working on the back end, two on the front end. They are accompanied by Burak, Andre and some of the other API3 core members.

Since the first few months, API3 has been working with Entrecasa Studios who are responsible for the design of the API3 website and the new DAO dashboard. There are already full designs for most of the MVP (Minimum Viable Product) of ChainAPI that consists of account management, API integrations and deployments. These are the three main features of the ChainAPI MVP and apart from deployments, they are already completed.

  • Account management consists of the basic user registration, login and password reset.

  • API integrations capture the representation of an API through a graphical wizard and allow users to generate the OIS (Oracle Integration Specifications) part of the config.json. This is the configuration file that is used to deploy an Airnode. The API3 integration wizard is basically a tool that simplifies the process of configuring an Airnode.

  • Deployments capture the last remaining details of the config.json file, e.g. where to deploy, which version and which region. It is possible for users to download these configuration files which they can plug into an Airnode. At the moment, deployments are in progress which is a bit tricky as communication from the Airnode is required in order to ping the ChainAPI. This is necessary to share various statistics through a dashboard, such as the online status, uptime, responsiveness and the version of every single Airnode. These statistics will help the DAO to decide whether or not they want to insure a specific Airnode.

Additionally, internal testing of API integrations is planned. As of now, mainly business developers that want to start serving data with Airnodes will benefit from it by capturing APIs and generating Oracle Integration Specifications which they can plug into the config.json.

Even though a lot of work is being done to complete ChainAPI, it is not possible to state how long it is going to take until it is ready for release. The completion also relies on the release of the initial 0.1.0 version of the Airnode which is being worked on in parallel.

What are primary / secondary proposals? (Burak)

It is a tiered system that divides proposals into two categories that require a different quorum in order to pass.

Initially, primary proposals require 50% of the votes to pass. An example for such a proposal could be the authorization of a token minting contract, which would be an important decision to make, and thus should be more difficult to pass.

Secondary proposals only require an initial 15% of the votes to pass. For example, a proposal to fund a team for a certain amount of time should pass more easily as you do not want to involve the whole DAO to decide this.

For the required 50% of a primary proposal, the idea is to authorize the primary agent by enacting the address for all the important matters. In order for someone to attack, they would need to conduct a 51% attack.

A secondary agent can be used for secondary proposals, such as day-to-day and month-to-month proposals. These could include regular fundings of internal teams.

Given that the design is flexible, it will be up for the DAO to decide whether or not this tiered system will be used. Technically, the DAO could decide that every decision requires primary proposals while dismissing the secondary agent. Alternatively, the DAO might also decide that primary proposals are too difficult to pass and that only the secondary agent should be utilized.

Ultimately, the quorum levels are governable by a primary proposal.

How does delegation work? (Burak, Ugur, Andre)

Participation by token holders is needed for proper governance. If only 40% of the DAO is actively voting and 60% is inactive, a primary proposal cannot pass even if everyone of the 40% is voting for it. Reminding the community to participate in such a case might work but it is impractical.

For this reason, token owners that do not want to vote are able to delegate their tokens to allow others to vote with them. This is done by copy-pasting an Ethereum address into the input field. However, the team does not want to release a list of Ethereum addresses to delegate to because this would lead to centralization if everyone ends up delegating to these.

Instead, the ideal solution would be that people who want to vote explicitly ask for delegations and announce their Ethereum address accordingly. To simplify this process, the team implemented the ENS integration. ENS stands for Ethereum Name Service and allows users to purchase .eth domains which they can associate with their Ethereum address.This allows people to refer to their domain instead of their Ethereum address, which makes it easier for delegators because they no longer have to copy-paste long addresses to delegate their tokens.

It is important to notice that delegators are not able to vote on proposals because their voting power has been transmitted to someone else. However, delegators still receive rewards while users that were delegated to do not earn any. Thus, the voting power through delegation is completely isolated from rewards.

People should choose carefully who they would like to delegate to because there is a risk that members on Telegram try to impersonate certain individuals. In such a scenario, it is best to confirm their identity by reaching out to their official handles that they use and you know of. It is also important to not delegate to people that are planning to delegate to others. Generally, it is best if delegators choose individuals who are actively voting and have the best interest of the project in mind.

How soon to beat Chainlink? (Ryan)

The team of API3 does not view themselves as direct competitors but rather complementary to Chainlink. While Chainlink is the leading third party oracle solution, API3 is the dominant first party oracle. There are certain use cases where it makes sense to use one and the other. Additionally, Chainlink has a head start, is already out there and has market share. API3 is expanding the market and the functionality that is available to dApps without taking market shares away from Chainlink, but by making the pipe bigger.

Any information on the new utility for API3 tokens that Burak hinted at in a recent medium post? (Burak)

The API3 token represents true ownership of the project. Governance tokens are in general powerful if they govern everything in a decentralized manner. However, most governance tokens do not achieve this and with centralized control, a token becomes less valuable due to limited utility.

At API3, everything is governed by the DAO, which increases the value of the token. However, staking will not be the only use case for the API3 token. Additional powerful utilities will be added to it that further boost its value, e.g. using API3 tokens to receive certain services.

Finally, the whole idea behind the API3 tokenomics is to create a token with several powerful use cases. If a token has more utility, it becomes more valuable and vice versa. Finding strong use cases for a token requires some creativity and for this reason, simple payment tokens do not work well in this regard because they can be forked and still provide the same service.

How was the initial APY decided? (Burak)

The initial plan was to start the APY at 75% and let it decay to 2.5%, but the front loaded inflation schedule was discarded early on. The current model adjusts on the basis if the staking target has been met or not and needs an initial value to begin with. It was decided that the best value would be the maximum plus minimum divided by two - basically the middle of 75% and 2,5%.

Are all locked rewards received a year from the initial staking date or will it be a partial / gradual release? (Ugur)

The rewards of each week are claimable after 53 weeks. So technically, claiming rewards after 1.5 years of staking would only allow to claim those that are dating to the first half a year of staking.

What functionality will the first version of the Airnode have? (Andre, Burak)

The alpha version has been used for a lot of hackathons that have been running. The next version would be the 0.1.0 release which won’t have too much functionality that isn’t already there. There are some potential changes for the configuration and a few other things that will be addressed.

When it comes to other oracle solutions, you first deploy the oracle contract and then the node but deploying a contract is difficult and expensive. The Airnode works differently. First, the node itself makes a transaction to create a record on chain, which is easier and much cheaper. It only requires you to fund the transaction. However, there are some friaction points that are being removed to make it even easier for people to run an Airnode.

Another target for the first version will be the request-response protocol which essentially means that someone makes a request on chain, gets the response and posts it back to the chain. This is working as of now. The Airnode also has to be audited which hasn’t been achieved yet.

What makes API3 more appealing than other projects like LINK to people looking to utilize an oracle? (Ryan, Ugur)

API3 is solving and handling different problems and use cases than existing oracle solutions.

There are a few advantages of API3 that are worth to be highlighted:

  • As data is provided directly from the API provider without going through a middle man, the reputation of the API provider is available directly on chain. Thus, if someone deals with large organizations that have a strong reputation to uphold, they are more motivated to do the right thing and pass the data as expected to the Blockchain.

  • Because it is much easier to connect existing APIs to the Airnode, it is expected that a larger economy of a much wider variety of APIs and data sources will become available through API3 compared to the existing and leading oracle solutions. The goal for API3 is to bring the entire API economy of web2 on chain.

  • If data is coming from a single off-chain source, it is more efficient and cheaper to use an Airnode than to use the network of a third party oracle. It is expected that data that is passed through an Airnode is going to be available at a lower cost on average.

  • When it comes to single API use cases, it is also safer to utilize API3 than a third party oracle. If you want to connect to your bank account, would you rather do it directly via the Airnode that is operated by your bank or through an unknown third party that would hold all your API keys? As you already know and trust your bank off-chain, you are not introducing any additional trust by connecting to the Airnode of your bank.

  • When API3 builds its decentralized data feeds, the feeds are aggregated on chain as opposed to off chain. Therefore, there is no trust necessary in the aggregation aspect of building decentralized data feeds. API3 will be more appealing to API providers and developers who are looking to use APIs and consume them on chain.

What if some rich rogue parties take over the DAO voting? (Andre, Burak)

To perform some sort of malicious action, a huge amount of tokens would need to be purchased on the market to gain enough voting power. For this reason, staking sort of deters people from trying to attack the project as it would be very expensive to do so. Having a staking target that is met also provides a lot of security against these attacks because it reduces the liquidity in the market - leading to a huge price increase if a large amount of tokens is purchased.

Anyhow, a rogue could also be someone you simply don’t agree with. Disagreements can be expected and in game theory, everyone is trying to benefit themselves when it comes to governance. Everybody who wants to vote out the decision of others they disagree with needs to either buy more tokens or avoid selling any for more voting power.

How do we vote for APR to increase faster to benefit early adopters? In my view this would be very fair / should have started at the peak APR and worked downwards. (Ugur, Burak)

The APR can be changed by voting. There is a parameter in the contract that decides the increasing steps but it works both directions. If the staking target is met, the APR will decrease by the update percentage that was set. Ultimately, it is required to convince enough people to vote for the change of the APR or it won’t happen because this is how decentralized governance works.

What to expect on the marketing side? Increase exposure. (Ryan)

The team is here for the technology and their goal is to bring the enterprise world onto the Blockchain, making the web3 ecosystem much more accessible to traditional companies and developers. The team is not going to change how it represents itself publicly but it will show up more frequently. API3 is always going to take the high road by staying professional for the long haul project, which is good for all the long-term holders and people that use the product.