What it means
A service that brings outside data, such as prices, onto a blockchain for smart contracts to use.
Lending markets rely on oracles to value collateral and decide when to liquidate. Chainlink is the best known.
How it works
A wrong or manipulated price feed can cause bad liquidations, so oracles are a key risk to check.
Related terms
| Term | What it means |
|---|---|
| Liquidation | When a lending protocol sells a borrower's collateral because its value has fallen too close to the loan. |
| Smart contract | A program that lives on a blockchain and runs exactly as written, holding and moving tokens by its own rules. |
| Collateral | What a borrower deposits to secure a loan, which the protocol can sell if the loan isn't safe any more. |
This glossary explains terms in general. It isn't investment, tax or legal advice.