In the Context of Derivatives, Why Is a Decentralized Oracle Preferred over a Centralized One for Settlement?

A decentralized oracle is preferred for derivatives settlement because it ensures the final price is censorship-resistant and tamper-proof, aligning with the core principles of DeFi. Derivatives settlement is a high-value, critical event.

Relying on a centralized oracle introduces the risk of a single entity being pressured or compromised to provide a false settlement price. Decentralization ensures the settlement is based on a robust, consensus-verified, and trustless data feed.