It’s Time to Upgrade Your Oracle

Why DeFi Developers Need to Make the Shift from Passive Data Providers to Performance Driven Oracles

Oracles are core blockchain infrastructure and the unsung heroes securing many of the largest DeFi protocols. Lending protocols and perpetual exchanges are important money legos for building onchain financial ecosystems, and both require oracles to bring real-time data onchain.

Where you get your data from isn’t just important — it’s critical. But oracles are no longer just passive data feed providers. While this was sufficient in the early days of DeFi, the industry has evolved and the demands placed on oracles have grown exponentially.

Developers building the next generation of DeFi protocols are now faced with choices about oracle services beyond the security and functionality of their protocol. We are entering an era where oracles are expected to drive protocol performance by recapturing value, enhancing efficiency, and contributing to protocol sustainability.

The days of relying on oracles for basic data feeds are over–it’s time to upgrade the system.

Think of traditional blockchain oracles like power lines–they deliver electricity (data) to houses (protocols) that allow them to function. These basic power lines offer no control over the flow of electricity beyond the mere delivery of the service. As a consumer, as long as the lights are on, you don’t really care where the electricity comes from. This has been the state of oracle services until recently.

Now, imagine upgrading your electricity provider to a smart grid that actively monitors and manages your energy usage. The smart grid analyzes real-time data to reduce waste, recaptures surplus power, and redistributes it for peak efficiency.

This is what API3 is doing with all data feeds being integrated with OEV Network. We have evolved from being passive data providers to being active drivers of protocol performance, recapturing value, and making sure protocols operate at their best.

So, why should you upgrade your oracle?

It’s simple: the next generation of oracles do more than just deliver data — they help you reclaim lost value, enhance protocol performance, and secure your long-term growth and success.

The Next Evolution of Oracles

The choices developers make when selecting their oracle providers directly influences the resilience, security, and growth of their protocols. While any oracle can provide data, choosing the right oracle is not just a technical decision–it’s a strategic move that positions your protocol for success in an increasingly competitive DeFi ecosystem.

As new challenges arise — whether they involve MEV, scalability, or security — protocols that rely on the next generation of oracles will be better equipped to adapt and thrive.

Here are some key features to consider when trying to futureproof your protocol.

Know your source.

Where’s your data really coming from? Many oracle providers claim decentralization, but API3 is leading the charge in proving it. The API3 Market makes it easy for builders to independently verify where they are consuming data from.

API3’s decentralized data feeds (dAPIs) are continuously updated by first-party oracle nodes using cryptographically signed data from the data providers themselves, offering verifiable source transparency and true decentralization of data by aggregating multiple sources. All data feeds on the API3 Market are powered by multiple, verifiable sources, ensuring unmatched security and trust.

ETH/USD price feed aggregated from seven verifiable sources

Built-in MEV solutions.

DeFi protocols leak a lot of value due to maximal extractable value (MEV) opportunities that arise around oracle updates, particularly around liquidations. API3 is redefining the oracle landscape with OEV Network, offering protocols a built-in mechanism to recapture that value.

Just as a smart grid recaptures surplus energy to reduce waste, API3’s data feeds recapture protocol MEV to enhance protocol performance. By simply using any of the data feeds on the API3 Market, protocols can recapture value from liquidations.

Developers no longer have to watch value leak from their protocols — by upgrading to API3’s Oracle Stack, they can stop the losses and reinvest recaptured resources back into their protocols–whether for higher yields, reduced fees, or innovation through treasury funds.

Essentially, a well-designed oracle can serve as a performance enhancing multiplier for the protocol.

Built to scale.

We are entering a multi-chain future where builders want to be able to quickly deploy to new chains without needing to make changes to battle tested code or run extra infrastructure. The API3 Oracle Stack makes this possible. With familiar push oracle architecture, developers can expand to new networks with the flip of a switch–knowing that your contracts are secure, your protocol is optimized for efficiency, and protected against unnecessary value loss.

The API3 Market removes the typical barriers and reduces the time required to access data, streamlining the process of utilizing real-time data and allowing builders to focus on what they do best–building.

Permissionless Access and Easy Integration

API3’s Oracle Stack is built around developer’s needs. The API3 Market simplifies the integration of decentralized, verifiable data into smart contracts, making it easy for developers to streamline their workflow. With its intuitive interface, developers can quickly browse, access, and manage over 160 data feeds across 37 networks, including popular assets like crypto, LST/LRTs, and stablecoins.

The API3 Oracle Stack offers permissionless access to verifiable data while enabling advanced features like MEV recapture. API3 provides a robust set of developer guides and tutorials to support smooth onboarding, making integration fast and efficient.

With permissionless access and a user-friendly market, upgrading your oracle has never been easier–it’s as simple as changing your proxy contract address.

Early Adoptoooors

Oracles that offer built-in MEV solutions are a new paradigm. API3 is the first oracle project to design this model by integrating all data feeds on the API3 Market with OEV Network. While other oracles are still experimenting with complex solutions that require protocols to run their own infrastructure or rely on multiple parties, API3 offers a straightforward, efficient approach.

Even though we are very early in the adoption curve, API3 has already seen leading projects like Orbit, Lendle, INIT Capital, and others upgrade their oracle. By transitioning from passive data feeds to performance-enhancing oracle services, these protocols are positioned for long-term growth and success across the Layer 2 landscape.

If your protocol still operates on traditional data feeds, it’s time to consider upgrading to API3’s Oracle Stack and joining the ranks of DeFi leaders exploring the boundaries of innovation.

Doubling Down on DeFi

Upgrading your oracle isn’t just a technical improvement — it’s a strategic decision that positions your protocol to be competitive across the growing Layer 2 landscape. By adopting the API3 Oracle Stack, you’re not just getting access to decentralized, verifiable data; you’re integrating core infrastructure that actively optimizes your protocol’s performance. Just as the smart grid transforms how energy is distributed and used, API3’s Oracle Stack transforms how protocols operate by recapturing lost value, driving better performance, and ensuring sustainable growth.

As we look towards the future of DeFi, API3 is doubling down on supporting the assets that will shape the next generation of onchain finance. In a rollup-centric Layer 2 landscape, decentralized assets like cryptocurrencies, stablecoins, and LSTs/LRTs are going to play a critical role. API3 is concentrating our efforts on the DeFi assets that matter most to the long-term performance and composability of Layer 2’s.

In this rollup-centric landscape, the networks that can offer enhanced capital efficiency and unlock new yield opportunities are going to thrive. API3 is focused on supporting these assets and ensuring that protocols can get the data they need when they need it in a competitive, multi-chain environment.

By upgrading to the API3 Oracle Stack, protocols aren’t just making a technical change to their smart contracts — they’re future-proofing their infrastructure for the next wave of DeFi innovation.