Oracle
A service that provides external, off-chain data to smart contracts, which by design cannot access any information outside their blockchain. Oracles bridge the gap between on-chain and off-chain worlds, supplying critical data like asset prices, weather conditions, sports scores, and random numbers. The 'oracle problem' — ensuring the oracle itself is trustworthy — is typically solved through decentralization, economic incentives, and data source aggregation.
“Chainlink oracles provide price feeds that DeFi protocols like Aave use to determine collateral values and trigger liquidations. Without reliable oracles, DeFi lending could not function securely.”
Chainlink (LINK)
The largest decentralized oracle network, providing tamper-resistant external data (price feeds, weather data, random numbers, and more) to smart contracts across multiple blockchains. Chainlink solves the 'oracle problem' — the challenge of getting reliable off-chain data on-chain — through a decentralized network of node operators who are economically incentivized to provide accurate data through staking and reputation systems.
Price Feed (Data Feed)
A continuously updated stream of off-chain data — most commonly asset prices — delivered to smart contracts by oracle networks. Price feeds aggregate data from multiple sources and exchanges, apply outlier detection, and deliver tamper-resistant reference prices. They are critical infrastructure for DeFi lending (determining liquidations), derivatives (settlement prices), and any smart contract that needs to know real-world asset values.
Smart Contract
Self-executing programs stored on a blockchain that automatically enforce the terms of an agreement when predetermined conditions are met. Smart contracts enable trustless transactions without intermediaries because the code, once deployed, executes exactly as written and cannot be altered (unless specifically designed to be upgradeable). They form the foundation of DeFi, NFTs, DAOs, and virtually all dApps.
DeFi (Decentralized Finance)
An ecosystem of financial services built on blockchain networks that operate without traditional intermediaries like banks, brokerages, or insurance companies. DeFi uses smart contracts to provide lending, borrowing, trading, insurance, derivatives, and yield generation in a permissionless, transparent, and composable manner. Anyone with a wallet can participate.