DeFi & Yield

What is a price oracle and how can it be manipulated?

A price oracle is a service that feeds external market prices into a blockchain so smart contracts can know what an asset is worth. Because contracts cannot read off-chain data on their own, lending and trading protocols rely on oracles to value collateral and settle positions. An oracle can be manipulated when an attacker temporarily distorts the price source it reads, for instance by moving a thinly traded pool, causing the contract to misprice assets. Robust designs reduce this by averaging prices over time and pulling from multiple independent sources rather than a single feed.