What Is a “Deviation Threshold” in Oracle Price Feeds?
A deviation threshold is a pre-set percentage change in an asset's price that must occur before the oracle is triggered to submit a new price update to the blockchain. For example, a 0.5% threshold means the price must move by at least that much from the last reported price.
This mechanism conserves gas fees by preventing unnecessary on-chain updates when the price is stable, while ensuring timely updates during high volatility.
Glossar
Deviation
Variance ⎊ Deviation, within cryptocurrency, options, and derivatives, represents the squared difference between an observed value and its expected value, quantifying the dispersion of potential outcomes around a central tendency.
Deviation Threshold
Constraint ⎊ Deviation Threshold functions as a critical constraint within oracle systems, defining the maximum permissible percentage difference between the current on-chain price and a newly calculated aggregate off-chain price.
Threshold
Barrier ⎊ A threshold, within cryptocurrency derivatives and options trading, fundamentally represents a price level that must be breached for a contract to become active or trigger a specific outcome.