What Role Do Oracles Play in the Function and Security of Decentralized Stablecoins?

Oracles are essential data feeds that bring real-world information, such as the current price of collateral assets, onto the blockchain. For decentralized stablecoins, they are critical for accurately determining the value of locked collateral and triggering liquidations when a user's collateral ratio falls below the required threshold.

The security and reliability of the oracle directly impact the stability and solvency of the entire protocol.