In the ancient world, oracles were people who delivered messages and knowledge from the gods to the mortals.
In the blockchain world, an oracle is a technical component that delivers information about the real-world to on-chain smart contracts.
- a change in the Bitcoin to ADA price may trigger a limit order in a DeFi contract,
- the final score in a soccer match may trigger a payout in a betting contract,
- or an extreme weather event may trigger a crop insurance contract.
The real-world data published by an oracle must be trustworthy as it has significant financial consequences for on-chain events.