Since the technological advancement of Blockchain has brought Smart Contracts, it revolutionized numerous traditional methods of various tasks in general
Blockchain Technology, a breakthrough in existing technology has brought a lot of changes in the contemporary format of how things used to operate traditionally. Now data getting stored on the public ledger of blockchain makes it more secure and private than any other existing method.
Then it brought the ability of smart contracts, which took the whole blockchain technology to another level. Smart contracts are primarily targeted to remove the involvement of any intermediaries making it free from any abstracts, errors, and fluctuations that come in between due to human mediation.
Smart contracts made it possible that ‘Codes are the new law’, where there is the possibility to put every other task that could run on the blockchain. Smart Contracts got more accessibility to the information that it needs for the execution after introducing Oracle.
What Smart contracts do is that they work as the digital contracts for different projects that could be between either two individuals, or institutions or could be between individuals and institutions. It is set in such a way, consisting of several conditions that after meeting those the contract gets initiated by itself.
Now to confirm the required factors, smart contracts would need to collect data from the physical world to get initiated, for which Oracles come into play. All the required data including temperature, timeline, climate, and similar sort of factual information, Oracles provide to smart contracts through API.
For instance, there would be a system installed that would collect the pool of money from investors and along with that it also keep eye on the flow of capital, whether its outflow or inflow. The protocol would have certain criteria fixed about allocating the capital back to investors after fulfilling the requirements such as time period or pool capacity, etc. This needs no intermediary or involvement of any individual or institution, having smart contracts dealing with the situation with the help of Oracle’s system.
Source: https://www.thecoinrepublic.com/2022/05/28/how-does-oracle-make-smart-contracts-to-reach-their-full-potential/