You hit the nail on the head. Unless it’s totally virtual - on chain finance, gambling, etc. the contracts are only as good as the oracles. I guess that’s why DeFi works so well.

Fortunately decentralized oracles are an area of focus right now, but it’ll be a slow process since most expansion will require a special integration and potentially expert oracles.

In fact, Ian Grigg's Ricardian Contract construct was originally created with centralized enforcement in mind. To him, the purpose of these contracts was to create an immutable record of the intent of any transaction that could then be followed all the way back to its inception in the event of a dispute.

So part of the magic of the smart contract is illustrating intent from the beginning, and making that intent customizable! Oracles are still an unsolved problem, but we absolutely believe that reducing the barrier to entry for becoming or acting as an oracle will result in cost savings as the ecosystem matures.