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.
Glossar
Integrity
Data ⎊ Data integrity is the assurance that market information, particularly asset pricing feeds from oracles and trade execution records, remains accurate, consistent, and unaltered throughout its lifecycle.
Oracles in Decentralized Finance
Integrity ⎊ The trustworthiness of the data supplied by these external information conduits is paramount, as they serve as the bridge between off-chain market realities and on-chain smart contracts.
Data Integrity
Provenance ⎊ Data integrity within cryptocurrency, options trading, and financial derivatives fundamentally relies on establishing an immutable provenance for each transaction and data point.
Financial Stability
Objective ⎊ Financial stability refers to a state where the financial system is resilient to shocks, can smoothly facilitate the allocation of resources, and effectively manage risks.