Why Is a Robust Oracle System Critical for Managing Negative Equity during a Depeg?

A robust oracle system is essential because it provides the reliable, real-time price feed (the "mark price" or "index price") used to calculate margin, P&L, and liquidation levels. During a stablecoin depeg, the oracle must accurately reflect the depegged market value of the settlement asset, not just its $1 peg.

If the oracle is slow or inaccurate, the exchange's risk engine will calculate margin calls and liquidations based on a faulty price, leading to negative equity or incorrect liquidations, exacerbating the crisis.