The Political Dilemma of Decentralized Finance: Why Oracles Pose a Risk

Will Fey, co-founder and smart contract developer at Ammalgam, explores why reliance on oracles in decentralized finance (DeFi) is creating systemic vulnerabilities. He argues that the current model of relying on centralized oracle networks for critical functions like pricing, liquidation, and collateral checks puts DeFi protocols at risk due to their susceptibility to manipulation and potential failures. Fey highlights numerous historical instances where oracle-related events have triggered significant losses in DeFi protocols like Venus, Mango Markets, and Inverse Finance, demonstrating the inherent fragility of this reliance.