# The Blockchain Oracle Problem in Decentralized Finance--A Multivocal Approach
## 7 Conclusions  
Oracles constitute the interface between the blockchain and the real world [24]. However, as centralized entities, they reintroduce the concept of trust and single point of failure in a decentralized environment [42]. Decentralized Finance as a real-world blockchain requires oracles to fetch data about prices and exchange rates of crypto assets [49]. A biased or imprecise communication channel can result in an unwanted operation and the consequent loss of millions of dollars [114; 115]. The large amount of hacks that were performed, exploiting oracle vulnerabilities solely in 2020, are proof of this weakness [7; 113; 120; 122]. Utilizing an MLR, this study investigated the use of oracles in DeFi, summarizing and codifying the main issues arising from their implementation. Since the oracle problem includes technical and social aspects, this works also distinguishes these two areas, providing examples of failures and solutions. From the analysis of data provided, it emerges that standardization of oracle design and patterns is required to face the most recurrent hacks,  
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such as front running and flash loans [8; 104]. On the other hand, social issues, such as Sybil schemes, due to their consequences for the performers themselves, can be considered less worrying than technical issues, such as malfunction or data tampering. For that reason, addressing the oracle problem in DeFi may be easier by prioritizing standardization to address the technical issues and providing economic incentives to limit the social ones. Interestingly, there are newborn blockchain protocols that propose different blockchain interactions with the external world. Mina, as an example, presents \"snarks\" to privately verify external data on-chain, without the need for external oracles [130; 131]. Another recent proposal enables blockchains to make external calls to the real world directly [22]. If blockchain systems will someday be able to interact with the real world without the need for oracles, this will surely determine a great change for Decentralized Finance (and other DLT applications). This study contributes to the literature by providing the first structured review on oracles in DeFi. Furthermore, it focuses on the oracle problem and outlines a framework for more robust oracles to be developed. The results presented herein can be a starting point for academics to build other structured reviews, or they can be used as the background for empirical works. Practitioners may also draw on the conclusions to enhance their oracle's security or develop new projects. Furthermore, in this paper, insight was provided on the following:  
* What is the oracle problem, and how does it impact DeFi applications? * How do price oracles work? * How do different DeFi applications rely on oracles? * What are the risks associated with oracles in DeFi? * What was the impact of past oracle failures in DeFi? * What are possible improvements to oracle weaknesses? This study has, of course, limitations that are derived first from the scarcity of data to draw upon and then by the lack of previous systematic reviews in the field. Furthermore, the present study is biased by the authors' personal perspective and background, which may have influenced the selection and excluding criteria. Further studies may build on this, as well as on Liu et al. 's paper [17], and check whether different oracle designs affect the deviation index of data feeds. Furthermore, a comparison between UMA and Razor Network economic incentives could shed light on their effectiveness to prevent 51% of attacks. Other reviews may also focus on a specific DeFi application (lending, flash loans, derivatives, etc.) and further discuss the role and risks of the implemented oracles. Conceptualization, G.C. ; methodology, G.C. ; validation, J.E., data curation, G.C. ; writing--original draft preparation, G.C. ; writing--review and editing, G.C. and J.E. ; supervision, J.E.