An external oracle is a service that brings real-world data onto a blockchain for use by smart contracts. These decentralized or centralized entities act as data relays, securely fetching information from off-chain sources, such as stock prices, weather data, or sports results, and making it available to smart contracts on a blockchain. Oracles are essential for enabling smart contracts to interact with external events and data, extending their utility beyond purely on-chain operations. Their reliability is critical for the accuracy of decentralized applications.
Context
The reliability and security of external oracles are paramount for the functionality and trustworthiness of many decentralized finance and Web3 applications. Ongoing developments focus on enhancing oracle decentralization, robustness, and resistance to manipulation, often involving multiple data sources and reputation systems. News frequently reports on oracle network upgrades, security audits, or incidents related to data feeds, underscoring their foundational role in connecting blockchains to the outside world.
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