How does a blockchain know prices outside its network?
Lending and derivatives protocols rely on prices reported by oracles to calculate collateral ratios and trigger liquidations. Smart contracts can’t read off-chain data directly—such as token prices or match results—so oracles write that data to the blockchain.
If an oracle is manipulated, the contracts that rely on it will settle using incorrect prices. That’s why it’s essential to have diverse data sources and a sufficiently decentralized network of nodes.
$LINK is the token of the oracle network Chainlink.
This is not a recommendation. Make your own decisions.
Lending and derivatives protocols rely on prices reported by oracles to calculate collateral ratios and trigger liquidations. Smart contracts can’t read off-chain data directly—such as token prices or match results—so oracles write that data to the blockchain.
If an oracle is manipulated, the contracts that rely on it will settle using incorrect prices. That’s why it’s essential to have diverse data sources and a sufficiently decentralized network of nodes.
$LINK is the token of the oracle network Chainlink.
This is not a recommendation. Make your own decisions.