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I cannot trust a system that trusts an oracle.

What if it is a trustless Oracle? Augur kind of tries to be this, and appears to do well within a limited scope.

Very limited, i.e. they're down to a few tens of people bothering to vote daily.

The amount of people “voting” seems to be less important than the amount at stake, as if it was a large stake proved incorrectly somebody may come in and fix that. $1.2m trades in 1 market with $800k open interest isn’t that bad.

Trusted is the opposite of trustless.

The point is that in a trustless system trust can be earned by reputation, which is distributable and relatively trustless. Sure, you are taking the risk that you'll get screwed, but that risk factor should be calculable.

It's worked so far for the Dai, a USD tethered stablecoin based on Ethereum. Smart contracts buy or sell Dai against ETH to keep the price around US$1, the oracles feed in the USD/ETH rate from various exchanges. No actual USD are bought or sold by the Dai contracts.

https://coinmarketcap.com/currencies/dai/