Driving DeFi Growth on Polygon zkEVM
This significant development comes following the launch of Polygon zkEVM earlier this year, which aimed to harness the power of zero-knowledge proofs while maintaining Ethereum Virtual Machine (EVM) equivalence. Since April 2023, API3 has been actively engaged in providing first-party oracle services to Polygon zkEVM. The recent introduction of managed decentralized APIs (dAPIs) on the API3 Market empowers developers with access to decentralized data feeds delivered by first-party oracle nodes, featuring native-chain aggregation.
Enhancing DeFi with First-Party Push Oracles
The decentralized finance (DeFi) landscape, centered around lending protocols and perpetual decentralized exchanges (DEXs), relies heavily on real-time market data, which necessitates on-chain integration through oracles. Many DeFi applications, accounting for billions in TVL, predominantly rely on push-type oracles. However, existing blockchain oracles often come with high fees and limited source transparency, potentially introducing vulnerabilities.
Addressing these challenges, API3 has innovated a novel push oracle solution built around a first-party architecture. This innovation enables DeFi protocols currently using push oracles on other EVM chains to seamlessly transition to Polygon zkEVM, accelerating the adoption and scaling of DeFi and potentially reaching a broader user base.
API3’s groundbreaking push oracle is structured around the Airnode first-party oracle node. This design eliminates intermediaries, paving the way for a safer and more efficient method of bringing real-time market data on-chain. With features such as native-chain aggregation and multi-source data feeds, developers can access more reliable data, reducing downtime and enhancing data accuracy.
Unlike traditional oracle designs that involve third-party node operators, API3’s first-party push oracle sources data directly from the origin. These oracle nodes, managed by the data providers themselves, ensure cryptographically signed data integration onto the blockchain. This approach offers unprecedented data source transparency, setting a new industry benchmark.
Redefining the DeFi Landscape
Leading DeFi platforms like Aave, Compound, and various DEXs have historically relied on push oracles. However, API3’s innovative push oracle is poised to reshape the landscape. This model aligns the interests of data providers, networks, and decentralized applications (dApps). The introduction of API3’s managed dAPIs establishes a new industry standard, providing direct access to a wide array of real-world data, including cryptocurrencies, forex, equities, and commodities.
The DeFi ecosystem is already reaping the benefits of API3’s DAO-managed oracle service. Platforms like QuickSwap Perps and Dovish, a perpetual swap protocol, leverage dAPIs for precise pricing. MantisSwap, a stable asset-focused DEX, uses dAPIs to enhance its protection mechanism against stablecoin depegging, showcasing the enhanced security features of dAPIs for DeFi applications.
Tropykus, a lending and borrowing dApp branching from AAVE V2, utilized self-funded dAPIs for a rapid launch on Polygon zkEVM. With minimal adjustments needed in established code, developers gain a competitive advantage, potentially enabling swift deployment on emerging networks.
Advancing Ethereum Scaling with Oracles
API3’s collaboration with Polygon zkEVM highlights the critical role of oracles in Ethereum’s scaling journey. The next generation of blockchain oracles promises heightened security and transparency through first-party oracle solutions. The API3 DAO remains committed to exploring the vast potential of decentralized finance as smart contract capabilities continue to evolve.
Jack Melnick, Head of DeFi Business Development at Polygon Labs, expressed excitement, stating, “API3’s deployment on Polygon zkEVM is incredibly promising, enhancing the DeFi ecosystem with an innovative push oracle solution. The integration of managed dAPIs within Polygon’s scalable infrastructure marks a significant stride toward a more transparent and secure future for decentralized finance.”