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What Is an Oracle and Why Is It Crucial for Smart Contracts in Financial Derivatives?

An Oracle securely feeds real-world financial data, like asset prices, onto the blockchain, which is essential for derivative contract execution and settlement.
Greeks.Live06.11.25

What Is an Oracle and Why Is It Crucial for Smart Contracts in Financial Derivatives?

An Oracle is a third-party service that securely feeds real-world data, such as asset prices, interest rates, or market volatility indices, onto the blockchain for smart contracts to use. It is crucial because blockchains are deterministic and cannot access off-chain data natively.

For financial derivatives, an Oracle provides the critical price reference point needed to trigger contract execution, calculate collateral requirements, and determine final settlement payouts.

What Is the Role of an Oracle in Linking DeFi Derivatives to Real-World Data?
How Do Oracles Feed Real-World Price Data into a Derivative Smart Contract?
What Is a Data Oracle in the Context of Blockchain-Based Derivatives, and Why Is Its Security Critical?
Can Smart Contracts Interact with Real-World Data and Events?

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