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Oracle
How agreements execute

Oracle

An oracle is how a smart contract knows what happened in the real world. Without it, a contract can only see information that already exists on the blockchain. An oracle brings in external information, such as a price, a delivery confirmation, or a weather reading, so the contract can act on it.

TradFi equivalent
In traditional finance...
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TradFi equivalent
Market data feed. Before a trade can execute, the system needs verified real-world information - a price, a rate, an index level. The data feed is what supplies it. An oracle is the blockchain equivalent.
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Analogy
In everyday terms...
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Analogy
A thermometer connected to a thermostat. The thermostat knows what to do when the temperature drops, but it can't act without the thermometer telling it what the temperature actually is. The oracle is the thermometer.
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