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.
Glossar
Dex Derivatives
Derivative ⎊ Dex Derivatives are financial contracts, such as perpetual futures, options, or swaps, that are traded and settled entirely on a decentralized exchange (DEX) using smart contracts.
Final Settlement Price
Valuation ⎊ The Final Settlement Price in cryptocurrency derivatives represents the agreed-upon value of the underlying asset at contract expiration, crucial for determining payouts in options and futures.