Welcome to another tutorial on our $Percolator Tutorial series
Let’s talk about something many traders hear about but rarely understand
Oracles
An oracle is simply a system that brings real market prices onto the blockchain
Imagine you’re building a trading platform on-chain. The blockchain itself has no idea what BTC is worth in the real world. It needs an external source to report that information
That’s the job of an oracle.
For example, if Bitcoin is trading around $70,000 across major exchanges, an oracle reports that price so smart contracts can use it.
Percolator uses Pyth, which is one of the fastest and most widely used price oracle systems in crypto
Why does this matter?
Because if the exchange only looked at its own internal trades, someone could manipulate the market easily
Here’s a simple example 👇 👇
Imagine a small market where only a few people are trading. One trader places a large buy order and temporarily pushes the price up.
If the system trusted that single trade, it might think the real price moved up. That could cause other traders to get liquidated unfairly.
But if the system also checks an oracle price, it can say:
“Wait a second. The global market says BTC is $70k. That one trade is not enough to change reality.”
So the oracle acts like a reference point for the entire exchange.
It’s basically the system saying:
“We’re not going to let one random trade decide the real price.”
That’s why oracle integration is such an important part of Percolator’s pricing engine
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