What Is the Concept of “Cryptoeconomic Security” as Applied to Oracles?

Cryptoeconomic security uses a combination of cryptography and economic incentives (rewards and penalties) to secure a decentralized system. For oracles, data providers must stake a significant amount of value.

If they report honest data, they earn a reward. If they submit malicious data, their stake is penalized or "slashed." The cost of a successful attack is made prohibitively expensive.