What Is an Oracle?
Oracles are an essential part of every blockchain ecosystem, as they allow Web3 protocols to access legacy systems, existing data, and advanced computations. In addition, decentralised oracle networks (DONs) are essential because they allow for the creation of hybrid smart contracts, which offer blockchains the opportunity for on-chain and off-chain infrastructure that may aid them when supporting decentralised apps (dapps) that need to react to events in the real world and interoperate with traditional systems.
Issue With Blockchains
Blockchains face the issue that their smart contracts need to have the capabilities to interact with systems currently existing outside of the blockchain environment in which they reside. Oracles solve this limitation by allowing access to external data off-chain without affecting a blockchain’s security.