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Cryptography

What is Oracle Risk?

Oracle Risk The risk that an external data source (oracle) feeding off-chain information to a blockchain is manipulated, delayed, or fails, which can result in incorrect smart contract execution, portfolio loss, or liquidation in DeFi protocols.

Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework

How is “Oracle Risk” Used in Practice?

Portfolio risk officers must monitor oracle risk in DeFi protocols, as inaccurate price feeds can trigger unexpected liquidations or incorrect NAV calculations.

Certification Exam Relevance

CFAACCAFRM

Who Needs to Know This Term?

  • Financial Analysts
  • Bankers
  • Traders

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Frequently Asked Questions

What is Oracle Risk?

The risk that an external data source (oracle) feeding off-chain information to a blockchain is manipulated, delayed, or fails, which can result in incorrect smart contract execution, portfolio loss, or liquidation in DeFi protocols.

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