What Is the Risk of “Oracle Manipulation” in a Decentralized Derivatives Exchange?
Oracle manipulation is the risk that an attacker can temporarily and artificially influence the price feed provided by the oracle. In a decentralized derivatives exchange, this can lead to immediate and unfair liquidations of leveraged positions or the fraudulent settlement of contracts.
An attacker might use a flash loan to briefly manipulate the spot price on a single exchange that a vulnerable oracle relies on, causing significant financial loss for users.