Oracle

A service that brings off-chain data (prices, events) onto a blockchain for smart contracts to consume.

An oracle is a service that delivers off-chain data to smart contracts. The canonical use case is price feeds: a lending protocol needs to know ETH's market price to liquidate undercollateralized loans. Chainlink dominates the oracle market, with Pyth, RedStone, and others competing.

Oracle manipulation is a frequent attack vector. If a protocol relies on a single low-liquidity DEX as its price source, an attacker can manipulate the price for one block, trigger favorable trades or liquidations, and walk away with millions. Quality oracle integrations use multiple data sources, time-weighted prices, and deviation thresholds.