What Role Does Oracle Reliability Play in Decentralized Stablecoin Governance?

Oracles are critical for decentralized stablecoins, especially those that are crypto-collateralized or algorithmic, as they feed real-world price data into the smart contracts. Governance decisions, such as adjusting collateralization ratios or executing liquidations, depend on accurate and timely price feeds.

If an oracle is compromised or delivers incorrect data, the stablecoin protocol could be exploited, leading to incorrect liquidations or a loss of the peg.