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How Does an “Oracle” Function in a DEX Derivatives Platform?

An oracle is a third-party service that provides real-world data, such as asset prices, to a smart contract on the blockchain. Since blockchains cannot access off-chain data natively, oracles are essential for decentralized derivatives to determine contract values, trigger liquidations, and calculate the final settlement price for cash-settled contracts.

What Is an Oracle and Why Is It Crucial for Smart Contracts in Financial Derivatives?
What Is the Role of “Oracles” in Connecting DeFi AMMs to Real-World Financial Data?
How Do Oracles Feed Real-World Price Data into a Derivative Smart Contract?
What Role Does an Oracle Play in a Smart Contract for Derivatives Trading?