Oracles

Oracles are services or agents that provide external data to blockchain-based smart contracts, enabling these contracts to interact with the outside world. Smart contracts, while self-executing and secure, are inherently limited by their ability to access only on-chain data. Oracles bridge this gap by supplying real-world information from various sources—such as APIs, web services, and Internet of Things (IoT) devices—directly to the blockchain. This information can include anything from asset prices and weather conditions to sports results and stock market data, allowing smart contracts to execute based on real-time events.

The integration of oracles is essential for expanding the functionality and applicability of smart contracts across a wide range of industries. For instance, in the decentralized finance (DeFi) sector, oracles provide price feeds that enable the execution of loans, swaps, and other financial transactions based on accurate market data. In supply chain management, oracles can track goods in real-time, ensuring that contracts are fulfilled only when specific conditions are met, such as the delivery of goods to a certain location. By feeding trusted external data into smart contracts, oracles help automate and enforce agreements without the need for intermediaries.