What role do smart meters play in a blockchain energy market, and what trust problem do they create?

They are the data source — measuring real consumption and production in real time — which makes them the oracle: the chain can only trust its trades as far as it trusts the meter readings.

A smart meter is an advanced metering device that measures, monitors, and communicates electricity consumption and generation in real time. Every trade, settlement, and incentive on-chain is computed from its readings, so it is the bridge between the physical grid and the digital ledger — an oracle. A blockchain guarantees only that data was not altered after it was recorded, never that it was true when measured. If a meter is faulty or tampered with, false data flows on-chain and corrupts trades regardless of consensus. The mitigation is a Smart Meter Controller (SMC): a layer added above the legacy meter that generates verifiable proofs of the readings, so their integrity can be checked without exposing the raw data.

Go deeper:

• Smart meter (Wikipedia) — The metering hardware that measures and reports consumption and generation in real time.