> For the complete documentation index, see [llms.txt](https://steakhouse.financial/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://steakhouse.financial/docs/risk-management/collateral/layers-pillars-and-criteria/market-rating-layer-3/oracle.md).

# Oracle

Oracle risk is one of four criteria in Steakhouse Financial's Market Rating layer, assessing how asset prices are sourced and applied onchain. Steakhouse Financial has developed a MetaOracle that can switch between two price feeds in the event of a deviation.

Value transfer in smart contract interactions is determined by the pricing of the asset. The price should be observable on-chain, correctly applied during user actions, and reflect the fair value of the asset.

When it comes to pricing, there are two relevant contexts. The market price reflects liquidity and price impact, which is composed of the liquidity provider’s spread and slippage. In contrast, the fair value reflects the primary market value when redemption is available without any fee to the issuer.

This redemption may be subject to a notice period, which reduces the ability to trade the asset atomically onchain. Fair value should be preferred for market stability and to avoid market price manipulation, whereas secondary market pricing may be preferable during a material market event. At Steakhouse Financial, we have developed a MetaOracle that can switch between two price feeds in the event of a deviation.

{% hint style="info" %}
Indicators:

* Market-based or NAV-based type oracle
* Ability to switch between feeds in case of deviation with MetaOracle
* Pegged-to-asset or pegged-to-value type
  {% endhint %}


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