Description

Oracle tokens are used to pay for and secure the delivery of real-world data (such as price feeds) to the blockchain. Smart contracts cannot access the internet directly and need 'oracles' to feed them data.

Risks

Systemic risk. Oracles are critical infrastructure. If the network fails or provides bad data, it can cause catastrophic losses across hundreds of DeFi applications. While the oracle token itself might survive, the reputational damage from such an event could be irreversible.

Operator concentration. Despite being decentralised in theory, many oracle networks rely on a limited number of permissioned or 'whitelisted' node operators to ensure data quality. This introduces centralisation risks. If these operators collude or are compromised, the integrity of the data is at risk.