Oracle Problem

Definition ∞ The oracle problem describes the challenge of securely bringing external, real-world data onto a blockchain network for smart contracts. Blockchains are deterministic and isolated, unable to directly access off-chain information. The problem involves ensuring that off-chain data feeds are accurate, tamper-proof, and continuously available to prevent manipulation. Solving this is crucial for smart contracts dependent on external information, such as those in DeFi.
Context ∞ The oracle problem is a fundamental challenge for the functionality and security of many decentralized applications, particularly in DeFi. Discussions often focus on the various oracle solutions available, their security models, and trade-offs between decentralization and data freshness. The ongoing development of robust and verifiable oracle networks is critical for expanding smart contract utility.