Blockchain oracle

An oracle is a service that brings outside information, such as asset prices, interest rates, sports results or weather data, onto a blockchain so that smart contracts can use it. Blockchains cannot fetch data from the internet by themselves, so lending protocols, stablecoins and derivatives rely on oracles to know, for example, the current price of ETH.

Chainlink is the most widely used oracle network. It aggregates data from multiple independent node operators to reduce reliance on any single source.

Oracles are a major attack point. If a protocol uses a manipulable price, such as a single thinly traded DEX pool, an attacker can distort that price with a large trade or flash loan and then borrow or liquidate at the false price. Many DeFi exploits have worked this way. Robust designs use multiple sources and time-weighted averages.