What Is a ‘Man-in-the-Middle’ Attack on a Centralized Oracle?
A man-in-the-middle attack on a centralized oracle occurs when an attacker intercepts and alters the data transmission between the centralized data source (like a stock exchange API) and the smart contract. The attacker essentially positions themselves between the two parties, providing the smart contract with a false price feed while the original source remains intact.
Since the contract only trusts the single data stream, it executes based on the manipulated price, leading to financial loss for the users.
Glossar
Centralized Oracle
ExternalDataReliance ⎊ A Centralized Oracle represents a single, non-decentralized entity responsible for fetching, verifying, and reporting external market data, such as spot cryptocurrency prices, to on-chain smart contracts.
Smart Contract
Code ⎊ The contract is fundamentally self-executing code deployed on a distributed ledger, embodying the terms of the agreement in an immutable format.
Centralized Data Source
Architecture ⎊ A centralized data source, within cryptocurrency, options trading, and financial derivatives, represents a singular repository for market data, order book information, and trade execution records; its design prioritizes deterministic data delivery, crucial for backtesting algorithmic strategies and ensuring regulatory compliance.