Bonded Data Providers

Bonded data providers are entities that supply information to a blockchain and must lock up a financial stake as a guarantee of the data's accuracy. This stake serves as collateral; if the provider submits incorrect or malicious data, the protocol can slash their bond as a penalty.

This mechanism creates a direct economic link between the provider's financial interest and the truthfulness of the data they deliver. It is a core feature of many decentralized oracle networks, ensuring that even if the provider is pseudonymous, they are still accountable for their actions.

In the context of derivatives, these providers are essential for supplying accurate price feeds that trigger liquidations or settlements. By requiring a bond, the protocol effectively creates a barrier to entry that filters out low-quality or malicious actors.

This system is foundational for maintaining the integrity of decentralized markets.