Price Feed
A data stream delivering current asset prices to a smart contract, typically sourced from an oracle, that DeFi protocols rely on for pricing, collateral valuation, and liquidations.
A price feed is a continuously updated stream of asset price data made available to smart contracts, since blockchains themselves have no native way to know real-world or off-chain market prices. Price feeds are typically delivered through a decentralized oracle network (see Kaavon's "Decentralized Oracle Network" glossary definition) that aggregates pricing data from multiple independent sources and publishes it on-chain for any contract to read.
DeFi protocols depend heavily on reliable price feeds for core functions including collateral valuation, calculating a position's health factor, determining liquidation eligibility, and settling derivatives. Because so much depends on a price feed's accuracy and timeliness, a compromised, stale, or manipulated price feed is a common root cause behind oracle manipulation (see Kaavon's "Oracle Manipulation" glossary definition) attacks, making price feed design and source diversity a central security consideration for any protocol that relies on one.
Examples
- A lending protocol relies on a price feed to continuously value a borrower's collateral and determine whether their position has crossed its liquidation threshold.
- A stale or manipulated price feed has been the root cause behind several major DeFi exploits, since incorrect pricing data can trigger unwarranted liquidations or let an attacker borrow against mispriced collateral.