> For the complete documentation index, see [llms.txt](https://docs.k2lend.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.k2lend.com/oracle-and-pricing.md).

# Oracle and Pricing

K2 uses a layered oracle system to resolve asset prices. For each asset, the protocol works through the following priority order until a valid price is found:

1. **Manual override.** If an admin has set an active override price for an asset, it takes priority over all other sources.
2. **Cached price.** Valid cached price data within the staleness threshold is used before querying external sources.
3. **RedStone.** Configured as the primary data source for crypto asset pricing. RedStone delivers frequently updated, reliable data feeds including yield-bearing assets such as LSTs, LRTs, Bitcoin LSTs, and yield-accruing stablecoins.
4. **Custom oracle.** A per-asset custom oracle, such as the composite oracles used for SolvBTC, xSolvBTC, and earnUSDC, where configured.
5. **Reflector.** The base oracle used for assets not covered by a RedStone feed.
6. **Fallback oracle.** A configured fallback source, used if the sources above fail to return a valid price.

All price data is subject to staleness thresholds. If a price exceeds its allowed age, the protocol rejects it and automatically moves to the next source in the priority order. This ensures that lending decisions are always based on current, reliable market data.

## Protections Against Bad Data

Price feeds can fail, get stale, or be manipulated. K2 has three layers of protection:

**Staleness Check.** Every price has a timestamp. If the price is older than the configured maximum age (default: 1 hour), the query fails. The staleness threshold can also be configured per-asset, overriding the global default. This prevents the protocol from acting on outdated information.

**Circuit Breaker.** If a new price arrives that is more than 20% above the last recorded price, K2 rejects it and the price query returns an error rather than falling back to the last known good price. Downward price moves are not limited by the circuit breaker. This protects against sudden upward oracle spikes and price feed manipulation. If a legitimate large upward movement occurs, such as a major market event, an admin can reset the circuit breaker to allow the new price through.

**Zero Price Rejection.** The protocol never accepts a price of zero. If an oracle returns zero, the query fails immediately. There is also a global oracle pause switch. If the entire oracle contract is paused by an admin, all price queries fail regardless of the data.

## How Prices Affect You

* **Collateral value.** Determines how much you can borrow and your health factor.
* **Debt value.** Changes in the borrowed asset's price affect your health factor.
* **Liquidation.** Prices determine when positions become liquidatable.