What Problems Oracles Have?

Ethereum’s smart contracts are completely self-contained and any data or access to off-chain data is limited. For security purposes, this is necessary because execution in blockchains must be deterministic and the reaction to subsequent calls to outside APIs can change in unknown ways. Nevertheless, with additional outside data, some desirable forms of smart contracts are only feasible.

Examples of real-world events that can affect on-chain loans and increase the chances of loan default include, but are not limited to the following:

  • Customer account activity

  • Payment history

  • Pandemic and other extrinsic factors

  • New government policies

Bird.Money's integration between On-Chain Protocols and Off-Chain Analytics tackles this situation to solve the Oracle problems.

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