Definition
A service that provides real-world data (like price feeds, weather, or sports results) to smart contracts on a blockchain. Oracles bridge the gap between on-chain smart contracts and off-chain information.
Why It Matters
Smart contracts are isolated from the outside world. Without oracles, DeFi lending protocols couldn't know ETH prices, and insurance contracts couldn't verify real-world events.
Example
Chainlink is the most popular oracle network. It provides price feeds to DeFi protocols like Aave and Compound — telling them how much ETH is worth so they can calculate collateral values.
Related Terms
Smart Contract
DeFi
Blockchain
Chainlink