Oracles
What are oracles?
Synthetix utilizes the decentralized Chainlink oracle network & Pyth oracle network, which provides up-to-date token prices data to smart contracts on Ethereum and Optimism Mainnet.
Responsibilities of an oracle
Updates, stores, and distributes up-to-date token prices relevant to the system.
Disables exchange functionality if prices are not fresh.
Provides functionality to perform exchange rate conversions between synth flavors.
How does Synthetix utilize oracles?
The Synthetix protocol utilizes its respective ExchangeRates contract to retrieve frequently stored price updates.
Chainlink Custom Oracle
The Synthetix protocol relies on various Chainlink oracles, including custom-built oracles tailored for specific Synthetix markets and requirements. In particular, the sUSDe/USD oracle price is calculated by multiplying the sUSDe/USDe exchange rate with the USDe/USD market rate, capped at $1.00. If USDe exceeds $1.00, the oracle may report unexpected values.
Synthetix Oracle Contracts
At Synthetix, the on-chain manifestation of the oracle is the ExchangeRates contract, which stores prices that are frequently updated by the oracle. The primary user of these prices is the Synthetix contract, which needs them to calculate debt allocations when issuing and burning synths, and to determine the correct quantity of synths when performing an exchange of one flavour for another.
It is also used by some other contracts, such as the Depot and PurgeableSynth contracts.
Constituent Contracts
Oracle
The oracle is responsible for collecting and updating all token prices known to the Synthetix system. Although it is not a contract, it controls a known Ethereum address from which price updates are sent to the ExchangeRates contract.
ExchangeRates
The Synthetix exchange rates contract which receives token prices from the oracle, and supplies them to all contracts that need it.
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