Price feed failures and liquidation cascades—these scenarios are not unfamiliar in the DeFi world. Among the most easily overlooked ticking time bombs is the risk associated with oracles.

Imagine this: you lock up a significant amount of assets as collateral in a lending protocol, but due to delayed price feeds or erroneous data, you wake up to find yourself forcibly liquidated. It sounds like a nightmare, but this is a harsh lesson left by Oracle attacks in DeFi history.

Which parts are most prone to issues?

**First pitfall: Risks inherent in the data source itself.** Do you know where the oracle’s prices come from? Some protocols rely on a single off-chain API—this is like putting all your eggs in one basket. If the API fails or gets attacked, the entire chain’s prices can become distorted. Comparing this to solutions that use multi-node consensus aggregation, the security level is significantly higher. The more centralized the data source, the greater the risk of targeted attacks.

**Second pitfall: Price update lag.** This is especially problematic during extreme market volatility. The system still calculates your collateralization ratio based on yesterday’s high price, but the market has already dropped. By the time the price feed finally updates, you’re already undercollateralized, with no time to top up your position, leading directly to liquidation.

**Third pitfall: Contract-level issues.** Even if the interface is standardized, is the underlying implementation code thoroughly audited? Is there a circuit breaker mechanism to handle extreme market conditions? These details determine the actual security level.

For users, the first rule of risk management is: only use oracle solutions that have been proven over time and have a good reputation. Don’t risk your funds on immature systems—costs can be devastating.