Blockchain & Cryptocurrency Glossary

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.

  • search-icon Clear Definitions
  • search-icon Practical
  • search-icon Technical
  • search-icon Related Terms

Volume-weighted Average Price (VWAP) Oracle

1 min read
Pronunciation
[vah-loom weyt-ed av-er-ij prahys awr-uh-kl]
Analogy
Like calculating your average grocery bill by giving more weight to bulk purchases than occasional small items.
Definition
An oracle that computes the average price of an asset over a period weighted by traded volume, reducing bias from low-volume spikes.
Key Points Intro
VWAP oracles smooth price feeds by emphasizing high-volume trades.
Key Points

Volume weighting: multiplies prices by trade sizes

Time window: defines start and end for averaging

Data aggregation: collects trades from DEXs and CEXs

On-chain posting: publishes VWAP for smart contract consumption

Example
A DeFi options protocol uses VWAP from major DEXs over one hour to set fair strike prices, minimizing manipulation from small flash trades.
Technical Deep Dive
Aggregator nodes subscribe to trade events via subgraphs and exchange APIs, compute sum(price × volume) and sum(volume) per window, then publish ratio to an oracle contract. Contracts store cumulative values and update via keeper bots to maintain freshness.
Security Warning
Thin-volume markets can still be manipulated by large single trades; ensure diversified data sources.
Caveat
High-frequency updates increase gas costs; balance between granularity and cost.
Related Terms
TWAP Oracle
Oracle

Volume-weighted Average Price (VWAP) Oracle - Related Articles

No related articles for this term.