How Do Oracle Price Feeds Impact Liquidation on a DEX? ▴ Learn

How Do Oracle Price Feeds Impact Liquidation on a DEX?

Oracle price feeds are essential for a Decentralized Exchange (DEX) as they provide reliable, external price data to the smart contract. Since a DEX does not have a centralized order book to determine a fair mark price, it relies on oracles to feed a secure, aggregate price for calculating unrealized PnL and triggering liquidations.

A compromised oracle can lead to incorrect liquidations.

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