What Is “Data Latency” and Why Is It a Major Risk for DeFi Derivatives Oracles?

Data latency is the time delay between a real-world price change and the moment that price update is available and confirmed on the blockchain for the smart contract to use. High latency is a major risk because it can lead to liquidations and settlements being executed based on stale, incorrect prices.

In volatile crypto markets, a delay of even a few seconds can result in massive losses for traders and protocol insolvency.