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Sikh Bitcoin · Expert · Lesson 13 of 21

Oracles, prices and measurement risk

Understand which price a lending contract actually uses.

About 14 minutes with practice. You only need something to take notes with. No real wallet details or payments are part of this lesson.

Course contents · Lesson 13 of 21
  1. Threat model before tools
  2. Design a custody architecture
  3. Entropy, mnemonics and passphrase tradeoffs
  4. Hardware signing and trusted displays
  5. Multisig and independent control
  6. Recovery and continuity across people
  7. Coin control and privacy tradeoffs
  8. Lightning operations and recovery
  9. Payment operations and reconciliation
  10. Native bitcoin and wrapped claims
  11. USDC, reserves and redemption
  12. Identify a Morpho market precisely
  13. Oracles, prices and measurement risk
  14. LTV, liquidation and nonlinear losses
  15. Variable rates and growing debt
  16. Vaults, allocation and exit liquidity
  17. Arc, Base and cross-chain dependencies
  18. Allowances, signing and simulation
  19. Treasury accounting and restricted funds
  20. Incident response with clear human authority
  21. Capstone: a defensible treasury design

What you will learn

  • Distinguish a front-end price from a contract’s oracle value.
  • Identify scaling and dependency errors in a price feed.

A contract needs a defined measurement

A lending protocol cannot simply look at the world. It consumes a value from its configured oracle. That value affects collateralization and liquidation eligibility. Morpho documentation explains that the on-chain oracle price can differ from the display price used by an interface. A reassuring portfolio chart therefore does not establish a position’s on-chain condition.

Units are part of the security boundary

A price function must be interpreted with the correct collateral and loan token units and normalization. Misreading decimals can produce a plausible-looking but wildly incorrect ratio. Also inspect whether the feed values a token directly or assumes a relationship to another asset. A wrapped asset’s market price and the price of underlying BTC can diverge when redemption or confidence changes.

Trace dependencies and failure behavior

For a fictional oracle review, identify the data sources, update behavior, administrative powers and response to stale or unavailable information. The exact contract implementation determines which protections exist; do not import assumptions from a different market. Document the observation time and unresolved questions. This course supplies no live risk alerts. An independent dashboard that stops updating must show stale status, rather than repeating its last healthy value as if nothing changed.

Practice on paper

A dashboard values collateral at 100 units, while the market’s oracle values it at 80. Which value governs the protocol’s collateral calculation?

Reveal the worked answer

The configured on-chain oracle value, interpreted under the contract’s rules. The dashboard may be displaying another price source or timestamp. Investigate the difference rather than treating the higher number as available borrowing capacity.

Check your understanding

Choose an answer in your head or on paper, then reveal the explanation. Retry whenever you like. Answers are not submitted or scored; completion marks are your own learning notes.

1. Can token decimals be ignored when calculating a ratio?

  • Yes
  • No
Reveal answer 1

No. Raw integers require the correct units and scaling.

2. Does a BTC price feed automatically prove a wrapper can redeem at that price?

  • Yes
  • No
Reveal answer 2

No. Wrapper-specific redemption and market risks can differ.

Take this with you

A price is a method, a unit and a timestamp—not just a number.

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