Hi @tnorm,
As this is my first time posting on the Arbitrum forums, by way of introduction I am API3 DAO’s ecosystem lead and work closely with our ecosystem, developer relations and business development functions to engage various elements of the Arbitrum community. Thank you for your efforts in driving this initiative and facilitating an open discussion around the Arbitrum DAO. It is great to see somebody taking ownership of ecosystem engagement and by no means is this as easy of a task as it may seem. Kudos to yourself for taking the lead and for the retrospective support from the DAO.
Overview
To date, API3 DAO has deployed a range of oracle services that are accessible to the Arbitrum community. Specifically, we have:
- Deployed API3 QRNG to Arbitrum One and Arbitrum Nova in Q2 2022 and have seen just over 200k requests since.
- Ensured developer learning resources are easily accessible and supported Arbitrum builders through considered ecosystem activities, community building events and direct builder engagement.
- Deployed 120+ decentralized data feeds that provide access to crypto, equities, commodities and forex price reference data through the API3 Market: API3 Market
- Upon the request of DeFi protocols have activated 4x price feeds at a 0.25% deviation that are now accessible for all in the ecosystem: API3 Market
Building on that last point, as of August 2023 decentralized data feeds called dAPIs were accessible to builders on Arbitrum One. dAPIs are data feeds powered by first-party oracles, which means that the API provider is running the required Oracle infrastructure without introducing additional third parties between the data producer and data consumer. Managed dAPIs see multiple first-party oracles aggregated on Arbitrum to provide a verifiably decentralized data feed that significantly enhances transparency within decentralized oracles. Since August we have seen dAPIs be utilized in a small number of DeFi dApps within the Arbitrum ecosystem with some updates to official TVS imminent.
What is the query?
Since the introduction of managed dAPIs, API3 has been utilizing the ARB grant from the Arbitrum DAO distribution to activate data feed required within the ecosystem. As of writing, we have utilized just over 1/3 of the initial 75k ARB to subsidize price feed operation for DeFi protocols on Arbitrum. With the introduction of this initiative, we have been considering how we can best support the growth of the Arbitrum ecosystem through the provision of oracle infrastructure within this framework.
- Support Network Growth: Accelerate the distribution of incentives to Arbitrum dApps to drive network and ecosystem growth.
With the operation of API3 data feeds, we need to cover gas costs associated with oracle transactions. This means if we are to activate a feed on Arbitrum we would require a conversion from Arbitrum to Eth. With consideration of the below, we wanted to openly communicate this and understand if this is an acceptable scenario or whether we should consider alternate mechanisms to reach this end goal within a request. Or consider an alternate framework.
- Grantees are required to keep distributions in ARB without converting to other assets.
When considering this it is worth noting that API3 does not have margins built into our data feed pricing. Any funds provided for data feed operation exclusively cover gas overheads associated with maintaining price on-chain from multiple first-party oracles, with a small buffer to account for abnormal chain behaviors that may see these costs spike. This does not include operational overheads such as contributor grants or API access costs.
Many thanks
Ben