Aggregation Strategies

Aggregation strategies are the methods used to combine data points from various sources into a single, reliable value for smart contracts. Simply taking the average is often insufficient, as it can be skewed by outliers or bad data from a single source.

More sophisticated strategies involve calculating the median, trimming extreme values, or assigning weights based on the reliability and liquidity of the source. These strategies are crucial for ensuring that the final price reported to the protocol is robust and representative of the broader market.

By filtering out noise and malicious data, aggregation strategies protect the protocol from sudden price swings that do not reflect genuine market sentiment. This is a critical layer in the defense against market manipulation.