The Importance of Oracles in DeFi: How They Enable Smart Contracts
In the rapidly evolving world of decentralized finance (DeFi), oracles serve as crucial infrastructure components that bridge the gap between blockchain networks and real-world data. These specialized tools enable smart contracts to access external information, making them truly functional in practical financial applications. This article explores why oracles are indispensable to DeFi development and how they power the ecosystem's most innovative applications. What Are Blockchain Oracles? Blockchain oracles are third-party services that provide smart contracts with external information. They act as bridges between blockchains and the outside world, delivering real-time data that would otherwise be inaccessible to smart contracts. Smart contracts, by design, operate in isolated environments. While this isolation ensures security and deterministic execution, it also creates what's known as the "oracle problem"—the inability to access external data that's often ...