What are Decentralized Oracles, and Why are They Important?
General - August 25, 2020
In order for DeFi coins to retrieve the right information, oracles are essential. Oracles are messengers of data in the Decentralized Finance (or DeFi) world. In this video, we breakdown what DeFi oracles are and why are they important.
What kind of data are we talking about here? Think of simple financial data like stock prices, or the going rate for an ounce of gold. This information is difficult to tie into the DeFi world. But it is important in order to have a comprehensive database of financial assets. Something a financial advisor would want. Oracles help retrieve this data in the right form and on a consistent basis.
But it’s more than just financial data. Think of any form of data you’d like to have. For instance weather data, traffic data, social media data, and more. If it’s measurable and varied, it can be retrieved.
Decentralized finance is building a comprehensive database of all quantifiable information. Data retrieving oracles of which Chainlink is an example are pivotal to that goal. Real-world data powers real-world assets like real estate, art, cars, and more to be represented via tokens on a blockchain.
Oracles in the DeFi world help bring in these real-world datasets so the DeFi crypto world ties together with the real world.
Enjoy the video.