A decentralized oracle network (DON) is a system that combines multiple independent oracle nodes, each with its own source of data, to establish a precise, durable, and decentralized feed of any arbitrary data.
To encourage truthful data attestation, decentralized oracle networks may implement staking and slashing mechanisms. The degree of decentralization in an oracle network can vary considerably, and like with other blockchain-based systems, the status of decentralization is never binary. The assessment of the claims and the degree of decentralization takes into account factors such as cryptographic proof mechanisms, cryptoeconomic incentives, preventative mechanisms, governance, and more.
The decentralized oracle network mechanism is crucial in providing a reliable source of external data to decentralized applications. It serves as a bridge between off-chain and on-chain data, providing developers with a mechanism to access real-world data in a secure, reliable, and decentralized manner. As such, decentralized oracle networks play a critical role in the continued development of blockchain technology and its applications.