An Oracle is a system that provides information from the real world to the blockchain. In our case the Oracle is used to provide the settlement/liquidation price from a trusted third-party exchange.
DMEX implements a unique approach to trading real-world and crypto assets without the actual underlying asset changing hands. Given the blockchain implementation and the use of a decentralized oracle (Provable.xyz) this trading method actually provides exactly the same trading experience while being more secure than a traditional centralized exchange.
Users can trade on DMEX using 1x leverage the same way they would on a traditional spot exchange, with the only difference being that the profits will be paid in ETH.
When a position expires or reaches the liquidation price, DMEX calls on the Oracle to record the latest MARK PRICE on the blockchain.
Only after the latest MARK PRICE is recorded on the DMEX smart contract, the position can be settled or liquidated.
The use of an Oracle is crucial to the safety of user funds, because it eliminates the risk of price manipulation on the part of DMEX owners.