What Is the Role of “Oracles” in Smart Contract Execution?

The role of an oracle is to act as a secure bridge between a blockchain and the outside world. Smart contracts are isolated from external data, so they need oracles to provide them with reliable, real-world information, such as financial market prices, IoT sensor readings, or the outcome of an event.

Oracles fetch this off-chain data, verify its accuracy, and deliver it to the smart contract. This enables the creation of powerful decentralized applications, like prediction markets or decentralized finance (DeFi) products that depend on external conditions.