How Can an Oracle Be Manipulated in a Price Feed Attack?
An oracle can be manipulated by feeding it false price data. This often occurs when the oracle relies on a single, easily influenced data source, such as a low-liquidity decentralized exchange (DEX).
An attacker can execute a flash loan to temporarily swamp the DEX's liquidity, drastically altering the token price for a brief period. The oracle records this incorrect price, which is then used by a DeFi protocol to execute a malicious action, like under-collateralized borrowing or liquidation.
Glossar
Price Feed
Feed ⎊ A price feed is a continuous stream of real-time pricing data from various sources used to determine the fair value of an asset.
Decentralized Oracle Networks
Architecture ⎊ Decentralized Oracle Networks (DONs) represent a robust infrastructure designed to provide reliable external data to smart contracts without relying on a single, centralized entity.
Decentralized Exchanges
Access ⎊ These platforms offer permissionless entry to cryptocurrency and tokenized asset markets, democratizing capital deployment into novel financial structures.