Why Is Data Integrity Crucial for Oracles in Decentralized Finance (DeFi)?

DeFi protocols rely on oracles for accurate, tamper-proof pricing data to execute core functions like lending, borrowing, and liquidation. If an oracle feeds incorrect or manipulated data, it can lead to devastating consequences.

Bad data can cause wrongful liquidations, allow users to borrow against overvalued collateral, or drain protocol funds. High integrity ensures the financial stability and fairness of the entire system.