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Define “Oracle Risk” and Its Impact on Interconnected DeFi Protocols

Risk of incorrect or manipulated external data (price feeds) causing massive, incorrect liquidations across dependent protocols.
Greeks.Live20.11.25

Define “Oracle Risk” and Its Impact on Interconnected DeFi Protocols.

Oracle risk is the danger that a decentralized application (dApp) receives incorrect or manipulated external data (like asset prices) from its data feed (oracle). Since lending and derivatives protocols rely on accurate price feeds for liquidations and collateral valuation, a faulty oracle can trigger massive, incorrect liquidations, causing a systemic death spiral across all dependent protocols.

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