How does a lending protocol know your collateral has fallen in value?
First, what it is: Smart contracts cannot independently read off-chain data, such as asset prices or weather. They rely on oracles to write that data to the blockchain.
Why this matters: If an oracle reports the wrong price, protocols that depend on it may liquidate assets at the wrong price. That’s why it’s important to have diverse data sources and a sufficiently decentralized network of nodes.
$LINK is the token of the decentralized oracle Chainlink.
Don’t place an order just because everyone around you is buying.
This is a compilation of public information. Please verify it yourself.
First, what it is: Smart contracts cannot independently read off-chain data, such as asset prices or weather. They rely on oracles to write that data to the blockchain.
Why this matters: If an oracle reports the wrong price, protocols that depend on it may liquidate assets at the wrong price. That’s why it’s important to have diverse data sources and a sufficiently decentralized network of nodes.
$LINK is the token of the decentralized oracle Chainlink.
Don’t place an order just because everyone around you is buying.
This is a compilation of public information. Please verify it yourself.