Define “Stale Data” and Its Risk in Options Contract Settlement.
Stale data is information that is outdated or not reflective of the current market reality. In options contract settlement, using stale data means the contract is executed based on an old, incorrect underlying asset price.
This can lead to significant unfairness, where one party gains or loses based on an erroneous price, especially in fast-moving markets. Oracles employ "heartbeat" updates and deviation thresholds to mitigate this risk.
Glossar
Deviation Thresholds
Calibration ⎊ Deviation thresholds, within cryptocurrency and derivatives, represent predetermined levels of statistical divergence from expected values, triggering pre-defined actions in trading systems or risk management protocols.
Stale Data
Data ⎊ Stale data refers to market information, such as a cryptocurrency's price or a trading pair's volume, that is considered outdated because it has not been updated on-chain within a predetermined, protocol-defined time interval.