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What is an oracle?

What is an oracle?

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.

For example,

  • 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.

Chainlink is currently the most well-known oracle solution and was built for the Ethereum blockchain. Charli3 is the first Cardano native oracle.