Why Is Data Aggregation Crucial for the Price Feeds of Financial Derivatives?

Data aggregation is crucial because it eliminates reliance on a single exchange or data source, which could be prone to manipulation or temporary outages. By collecting data from numerous high-quality sources, the oracle can compute a volume-weighted average price (VWAP) or a median.

This aggregated price is more robust, less volatile, and a truer reflection of the global market value, essential for the fair settlement of derivatives.