Oracles will simply send the current state of the ledgers on the Polkadot network to the Moonbeam parachain to report all the changes that the ledger underwent in the previous era. When the quorum of the oracle reports is reached, the ledger state on the parachain will be updated and rewards/losses will be applied to the staked funds.
Oracles send the state of ledgers for the last block in the previous era to the Moonbeam parachain
Currently, oracles are run by a few decentralized parties, which increases the security against malicious actions from one party. In the future, we are planning to add a relay chain block parser to ensure that oracle reports are correct.
If one of the oracles sends an incorrect report to the parachain, this report is not accounted in the rewards/losses distribution due to the quorum mechanism in Lido