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What Is the Role of an ‘Oracle’ in the Liquidation Process?

Provides reliable external price data to decentralized exchanges for accurate calculation of a position's collateral value during liquidation.
Greeks.Live23.11.25

What Is the Role of an ‘Oracle’ in the Liquidation Process?

An oracle provides reliable, real-time external price data to the decentralized exchange or smart contract. In liquidation, a decentralized exchange's smart contract relies on the oracle's price feed to determine if a position's collateral has fallen below the required threshold.

A robust, decentralized oracle is crucial to prevent manipulation of the reference price, which could lead to unfair or unnecessary liquidations.

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