The Oracle is responsible for valuing all the assets of a Line of Credit. This includes tokens held in the Escrow contract as collateral, Credit Tokens deposited by a Lender and any interest accrued. If a token is not supported by the Oracle, any transaction by a Lender to deposit that token will fail.
For every Line of Credit contract a decision is required at deployment as to which Oracle to use. The standard Oracle at Debt DAO is the Chainlink Feed Registry. This allows automatic support for any asset available on the Chainlink oracle network which means that any token listed on the registry can be lent out / borrowed or used as collateral.
If desired for a given loan, you can deploy your own oracle that supports NFT pricing, off chain assets, etc.
Borrowers and Lenders are both responsible for reviewing the Oracle address on a Line and for ensuring that it's a reliable oracle to use. If an incorrect asset price is returned by the Oracle, either party can be negatively affected which is why we default to the battle tested, industry standard Chainlink oracles.