What Is an ‘Oracle Exploit’ and How Does It Occur?

An oracle exploit is a type of attack where a malicious actor manipulates the data feed provided by an oracle to trick a smart contract into executing a financially advantageous action for the attacker. This can occur by manipulating the spot price on a low-liquidity exchange used by a single-source oracle, or by exploiting a vulnerability in the oracle's aggregation logic to submit a false value.

The result is often the theft of funds from a DeFi protocol.