What Is the ‘Oracle Problem’ in DeFi?

The 'oracle problem' is the challenge of securely and reliably getting external, off-chain data into a trustless smart contract environment. The problem is that while the smart contract is trustless, the data feed itself is a single point of failure and could be manipulated or inaccurate.

Solving this requires decentralized oracle networks (DONs) that use cryptoeconomic incentives to ensure data integrity.