How Does an Oracle Feed Real-World Data into a Smart Contract?

Oracles are third-party services that connect smart contracts to external, real-world information, such as market prices, weather data, or event outcomes. They fetch, verify, and relay this data onto the blockchain in a cryptographically secure and tamper-resistant manner.

This external data is crucial for executing many smart contracts, especially those related to financial derivatives that depend on external price feeds. Without oracles, smart contracts are limited to data already on the blockchain.