> For the complete documentation index, see [llms.txt](https://vaultbook.gauntlet.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://vaultbook.gauntlet.xyz/resources/frequently-asked-questions/oracles.md).

# Oracles

Why do we use hard-coded oracles when the borrowable asset is USDC?

For markets where the borrowable asset is USDC, we configure the USDC price at 1 USD within the quote function of the oracle, ensuring it remains constant regardless of market fluctuations. This mechanism is particularly useful in the following stablecoin depeg scenarios:

* Upward depeg: If USDC trades above $1, fixing the oracle price at $1 prevents borrowers from being prematurely liquidated due to a temporary price spike.
* Downward depeg: If USDC trades below $1, fixing the price prevents users from borrowing excess USDC at a discount, which would otherwise increase systemic risk.

With a market-rate oracle, users who borrow a depegged USDC below $1 may later face liquidations once the token regains its peg, as the nominal value of their debt increases. This can also introduce potential insolvency risk if the rebound is sharp and liquidity is thin.

During depeg events, our automated risk-off system proactively deallocates from USDC-based markets to minimize exposure and halts further borrowing until the asset stabilizes around parity.


---

# Agent Instructions
This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com.

## Querying This Documentation
If you need additional information that is not directly available in this page, you can query the documentation by asking a question.

Perform an HTTP GET request on the following URL with the `ask` and `goal` query parameters:

```
GET https://vaultbook.gauntlet.xyz/resources/frequently-asked-questions/oracles.md?ask=<question>&goal=<user_goal>
```

`ask` is the immediate question: it should be specific, self-contained, and written in natural language.
`goal` is what the user is ultimately trying to achieve, the reason they need the answer. Sharing it helps GitBook give you a better, more relevant answer. A goal is most helpful when it describes the outcome the user wants rather than restating the question. For example, with `ask=how do I create an API token`, a goal like `automate deployments from our CI pipeline` lets GitBook tailor the answer to that use case.

The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.