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What Are the Risks Associated with a “Single Point of Failure” in a Decentralized Oracle System?

A single point of failure allows for price manipulation or system halt, leading to wrongful liquidations or incorrect derivative settlement.
Greeks.Live16.11.25

What Are the Risks Associated with a “Single Point of Failure” in a Decentralized Oracle System?

A single point of failure in an oracle system means that if the one data source or relay mechanism is compromised, inaccurate, or goes offline, the entire derivative protocol that relies on it can be exploited or halted. For instance, a manipulated price feed could trigger wrongful liquidations or incorrect settlement of futures contracts.

Decentralized oracle networks mitigate this by aggregating data from multiple independent sources, ensuring robustness and security against manipulation.

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