How Does the “Oracle Problem” Relate to the Volatility and Price Feed for Cryptocurrency Options?

Cryptocurrency options rely on accurate, low-latency price feeds for the underlying asset to determine their fair value and for margin calculations. If the oracle feed is slow, inaccurate, or manipulated, the options contract may be priced incorrectly or liquidated unfairly.

The "oracle problem" is about ensuring the volatility and price data used by the options contract is a true reflection of the market, which is crucial for accurate risk management and contract integrity.