Data Oracles

Definition ∞ Data oracles are third-party services that provide external information to smart contracts on a blockchain. They act as bridges, connecting on-chain smart contracts with real-world data such as prices, weather conditions, or event outcomes. This function is essential for enabling smart contracts to execute based on off-chain events.
Context ∞ The current discussion around data oracles often involves their role in decentralized finance (DeFi) applications, particularly for price feeds required by lending protocols and derivatives platforms. Concerns regarding oracle security and decentralization are paramount, as a compromised oracle can lead to significant financial losses. Efforts are underway to develop more robust and cryptographically secure oracle solutions to mitigate these risks.