The Smart Oracle is the reason why Ojo is able to support so many mid-to-low market cap assets in each ecosystem. Without it, protocols would be susceptible to market manipulations hacks like the Mango Markets Hack.
The Smart Oracle is a set of on-chain calculations that are verified by the validator set and trustlessly relayed over to the receiving chain; using these, Ojo-powered protocols can actually tell if the market is being manipulated and prevent hacks by limiting users' collateral options to safe levels.
Ojo's validators are required to collect and submit data sourced from a diverse catalog of both on and off-chain sources. By minimizing the reliance on any individual price source, Ojo mitigates the impact of individual price sources which malfunction or are otherwise manipulated.
Ojo uses time-weighted average prices which incorporate time-weighted average volume and volatility to prevent short term trades from influencing the prices reported. By using TVWAPs to determine the true value of an asset, Ojo is significantly more difficult to manipulate when compared to existing oracle solutions. This can help safely enable the usage of lower volume and lower liquidity assets across DeFi Ecosystems.
With a distributed set of validators submitting price data sourced from a diverse catalog of price sources, it's important for additional security measures to be in place to prevent outliers from influencing the integrity of the data being provided. Ojo's erroneous provider filtering mechanism ensures that price sources which appear to be reporting abnormal price data relative to other price sources are filtered out before calculating and broadcasting a live price. This helps further smoothen out Ojo's reliable price feeds for all consumers.