DeFi & Yield

What is a blockchain oracle and why does DeFi need it?

A blockchain oracle is a service that feeds external data, such as asset prices, into smart contracts, which otherwise cannot access information outside their own network. DeFi needs oracles because lending, trading, and derivatives protocols depend on accurate real-world prices to function. For example, a lending protocol uses an oracle price to decide when a borrower's collateral has fallen too low. Because so much value relies on these feeds, a manipulated or delayed oracle can trigger faulty liquidations or losses, making oracle design a core security concern in DeFi.