What Role Do Oracles Play in the Settlement of Decentralized Financial Derivatives?

Oracles are critical for settling decentralized financial derivatives, such as perpetual swaps and options contracts. They provide the necessary, tamper-proof, real-time price feeds for the underlying assets.

For instance, an oracle delivers the final, definitive price of an asset at the contract's expiration time. This final price determines the payoff and triggers the automatic, trustless settlement of the derivative via the smart contract.