Technical Concepts
Oracle
Blockchain Oracle
System making external information usable by smart contracts
Definition
An oracle makes external or otherwise unavailable information usable by a smart contract. It can deliver prices, reserve reports or other observations; a price oracle is one specialization, not the whole category.
Example
A hypothetical reserve oracle reports $1.2 million of assets against 1 million tokens: reported backing is $1.20 per token. That arithmetic does not prove the assets are accessible or free of other claims.
How it works
Reporters obtain observations and publish a signed or aggregated result onchain. The consuming contract must check freshness, units and what the observation actually proves.
Risks to Consider
- Source errors become authoritative inputs to the contract
- Stale reports can survive until the next update
- A compromised reporter can attest to nonexistent reserves
Common Questions
Is every oracle a price oracle?
No. Price feeds report asset valuations; other oracles report reserves, randomness or events. Their verification and trust models differ.
