Blockchain Oracle

An oracle is a service that delivers outside information, such as asset prices, exchange rates or sports results, to smart contracts, which cannot reach the internet on their own. Lending protocols use price oracles to decide when a loan is undercollateralised, and derivatives platforms use them to settle positions. Because a contract will act on whatever number the oracle reports, the oracle becomes a critical dependency: manipulated or stale data has caused large losses in DeFi, often by moving the price on a thin market that a protocol was reading from. Robust designs aggregate many independent sources, use time-weighted averages and add circuit breakers when values move implausibly fast.