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Why Are Centralized Oracles Generally Unsuitable for Trustless Financial Derivatives?

They reintroduce a single point of trust, which can be manipulated or censored, negating the trustless nature of the smart contract.
Greeks.Live05.11.25

Why Are Centralized Oracles Generally Unsuitable for Trustless Financial Derivatives?

Trustless financial derivatives, by definition, rely on the elimination of counterparty risk and intermediaries. A centralized oracle reintroduces a single point of trust, which can be corrupted, censored, or fail.

If the oracle is controlled by one entity, that entity can manipulate the settlement price, invalidating the trustless nature of the smart contract and exposing users to significant counterparty risk.

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