Oracle

What is Oracle?

A trusted data feed that provides external information (like BTC price) to a smart contract so it can determine outcomes. Lygos uses oracle price attestations to determine DLC outcomes. The oracle publishes BTC/USD prices at agreed-upon intervals. Critically, the oracle has no knowledge of individual loans or borrowers. It simply signs price data. This separation of concerns means the oracle cannot collude with either party. All possible price outcomes and their corresponding transactions are pre-signed before your collateral is committed.

Full Definition

An oracle is a service that supplies real-world data to blockchain smart contracts. Since blockchains cannot natively access external data (like asset prices, weather, or sports scores), oracles bridge this gap. In DLC-based lending, the oracle attests to the Bitcoin price at specific points in time. The oracle's attestation determines which pre-signed transaction gets executed. For example, the borrower's collateral is either returned (loan repaid) or liquidated (price fell below threshold). Importantly, in a DLC, the oracle does not know about the contract or its participants. It simply publishes price data that anyone can use.

How Lygos Uses This

Lygos uses oracle price attestations to determine DLC outcomes. The oracle publishes BTC/USD prices at agreed-upon intervals. Critically, the oracle has no knowledge of individual loans or borrowers. It simply signs price data. This separation of concerns means the oracle cannot collude with either party. All possible price outcomes and their corresponding transactions are pre-signed before your collateral is committed.

How Lenders Compare

	Lygos	Ledn	Nexo	Unchained
Technology	Discreet Log Contracts (Bitcoin-native)	Centralized custody	Centralized custody	2-of-3 multisig (manual)
Custody	Non-custodial (DLC)	Custodial	Custodial	Collaborative multisig
Rehypothecation	0% (impossible by design)	100%. Your BTC may be lent out	Yes, platform re-lends assets	No

Full comparison

Why this matters for borrowers

Understanding Oracle is essential for evaluating non-custodial lending. This technology is what makes it possible to borrow against Bitcoin without surrendering your keys to a third party.

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