What Is a Time-Weighted Average Price (TWAP) Oracle and Its Benefit?
A TWAP oracle calculates the average price of an asset over a specific time interval, rather than using a single snapshot price. The primary benefit is that it makes the oracle less susceptible to manipulation through flash loan attacks or temporary price spikes on a single exchange.
By averaging over time, it provides a more robust and representative price feed for decentralized protocols.
Glossar
Twap Oracle
Oracle ⎊ A Twap Oracle, within cryptocurrency derivatives and options trading, represents a specialized data feed providing time-weighted average price (TWAP) benchmarks.
Temporary Price Spikes
Volatility ⎊ Temporary price spikes within cryptocurrency markets, options trading, and financial derivatives represent abrupt, short-duration deviations from established price trends, often exceeding historical volatility ranges.
Average Price
Calculation ⎊ The Average Price represents the volume-weighted mean execution price of an underlying asset or derivative contract over a specified interval, crucial for settlement procedures in many crypto derivatives markets.