How Do Oracles Relate to the Pricing of Cryptocurrency Derivatives?

Oracles provide the critical, real-time, and verifiable price data from external markets necessary to determine the fair value and settlement price of cryptocurrency derivatives like futures, options, and perpetual swaps. They ensure that the smart contract-based derivative accurately reflects the underlying asset's market price.

Without reliable oracle data, the derivative's value and settlement would be non-trustworthy and prone to manipulation.