How Does a ‘Deviation Threshold’ Affect a Data Feed Update?
A deviation threshold is a pre-set percentage change in the asset's price that must occur before the oracle network is triggered to submit a new price update to the blockchain. For example, a 0.5% threshold means the price must move by at least 0.5% since the last update.
This mechanism significantly reduces gas costs by preventing unnecessary updates but introduces a slight latency, as small price movements are not immediately reflected.
Glossar
Deviation
Variance ⎊ Deviation, within cryptocurrency, options, and derivatives, represents the squared difference between an observed value and its expected value, quantifying the dispersion of potential outcomes around a central tendency.
Data Feed
Source ⎊ A data feed in financial derivatives is the continuous stream of market information, such as price, volume, and order book depth, originating from exchanges and liquidity venues.
Deviation Threshold
Constraint ⎊ Deviation Threshold functions as a critical constraint within oracle systems, defining the maximum permissible percentage difference between the current on-chain price and a newly calculated aggregate off-chain price.
Threshold
Barrier ⎊ A threshold, within cryptocurrency derivatives and options trading, fundamentally represents a price level that must be breached for a contract to become active or trigger a specific outcome.