Oracles in DeFi Protocols: Bridging the Gap Between Blockchain and Real-World Data
Oracles in DeFi Protocols: Bridging the Gap Between Blockchain and Real-World Data! Decentralized finance (DeFi) has revolutionized traditional financial systems by leveraging blockchain technology to create open, transparent, and permissionless platforms. However, one of the challenges DeFi protocols face is accessing reliable external data, such as asset prices or real-world events, in a decentralized and trustless manner. This is where oracles come into play, acting as the critical infrastructure to connect blockchain-based smart contracts with external data sources. What Are Oracles in DeFi? In blockchain ecosystems, oracles are services or entities that feed off-chain data into on-chain smart contracts. Smart contracts, being self-executing agreements coded on a blockchain, rely solely on on-chain data to trigger functions. However, for DeFi protocols that involve lending, borrowing, stablecoins, derivatives, or prediction markets, access to real-world data such as market prices,