What are blockchain oracles and why smart contracts cannot work without them

Smart contracts are powerful, but they are also blind. They cannot see prices, read weather data, or verify that a payment arrived in a bank account. Oracles are the infrastructure that connects blockchains to the outside world, and the security of more than $200 billion in DeFi depends on them working correctly. Summary Blockchain oracles are services that deliver external data to smart contracts. Without them, smart contracts can only read information already stored on the blockchain, which excludes prices, weather, sports results, and virtually every other real world data point that makes contracts useful. The oracle problem is a fundamental challenge in blockchain design. Blockchains achieve trustlessness through deterministic computation, but connecting to external data sources reintroduces a point of trust. A smart contract that relies on a single oracle is only as secure as that oracle, regardless of how decentralized the blockchain itself is. Chainlink dominates the oracle market with approximately 75% of total value secured across decentralized finance protocols. Its decentralized oracle network aggregates data from multiple independent node operators to reduce single poin...