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Why Is a Single, Centralized Oracle Considered a Point of Failure for a DeFi Smart Contract?

A single oracle can be compromised to feed bad data, causing the immutable contract to execute incorrectly and leading to financial loss.
Greeks.Live05.11.25

Why Is a Single, Centralized Oracle Considered a Point of Failure for a DeFi Smart Contract?

A single, centralized oracle creates a single point of failure because if the oracle is compromised, malfunctions, or is malicious, it can feed incorrect price data to the smart contract. This bad data can lead to incorrect or exploitative liquidations or settlements in a financial derivative contract.

The contract's immutable logic will execute based on the flawed data, leading to financial loss without recourse.

What Is the Risk of an ‘Oracle’ Attack on a Decentralized Futures Platform?
How Does ‘Key Rotation’ Mitigate the Risk of a Compromised Key?
How Do Price Oracles Work and Why Are They a Central Point of Failure?
How Does a Malicious Attacker Attempt to Steal Funds Using a Compromised Address?

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