handsome
@wizard
🔥 Day 4 of #30daysweb3security @Web3SecurityDAO Today I continued my deep dive into the different types of Oracles and their pros/cons 🧵
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handsome
@wizard
@chainlink is the most widely used oracle but is considered 'centralized' as data feeds are provided by a group of node operators communicating with each other thru OCR (Off-chain reporting). Price feeds are reliable assuming operators do not collude.
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handsome
@wizard
@WeAreTellor is a decentralized oracle which works on the optimistic principle of 'true until proven false'. As shared in my Day 3 post, it is susceptible to manipulation IF its mechanics are not well understood; Time is needed for false data to be challenged and rejected.
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handsome
@wizard
On chain oracles like @Uniswap V3 provide price data that is sourced entirely on chain. Data is calculated using TWAP (time-weighted average price). While these are the most decentralized and trustless, they are also highly prone to manipulation. Why?
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handsome
@wizard
Price from on chain oracles are calculated based on underlying assets in a liquidity pool. Low volume/liquidity pools are highly sensitive to injection of capital -- which are often targets of price manipulation hacks.
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