1.2 Decentralized APIs

The issues of the previous generation of interoperability solutions can only be solved by taking a new perspective: The problem at hand is in essence the problem of decentralized applications not being able to receive services from traditional API providers in a decentralized way. Indeed, the primary use of interoperability solu- tions today is to deliver asset prices curated from centralized exchange APIs to DeFi applications, and emerging use cases such as prediction markets [20] and parametric

insurance [21] all have similar requirements. Therefore, further specifying the prob- lem definition as such will allow us to arrive at the next generation of real-world

interconnectivity solutions. This new definition of the problem implies that decentralized applications require specific Web API services to be delivered to the blockchain and this to be done in a fully decentralized, cost-efficient and secure way. Determining the requirements allows us to design a full product that satisfies them optimally: Decentralized APIs, or dAPIs for short, are networks of API provider-operated first-party oracles that are governed in a decentralized way. In contrast, decentralized interoperability solutions consist of an oracle network of third-party middlemen governed by a centralized entity, which is necessitated by their under-specified problem definition. See Figure 2 for a visual comparison.