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Why Are Oracles Often Used in Conjunction with Concentrated Liquidity Protocols?

Oracles provide the current market price, allowing protocols to automatically rebalance LP positions to keep capital active and earning fees.
Greeks.Live21.11.25

Why Are Oracles Often Used in Conjunction with Concentrated Liquidity Protocols?

Oracles are crucial for concentrated liquidity protocols to automate the management of liquidity ranges. Since LPs can be passive, protocols use oracles to fetch the current, accurate market price of the assets.

This data allows the protocol to automatically shift or "rebalance" the LP's concentrated position to remain centered around the current market price. This automation is essential to ensure the LP's capital remains "active" and continues to earn fees without constant manual intervention.

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