How Are Oracles Used to Settle Binary Options Contracts?
Binary options contracts are settled based on a simple 'yes' or 'no' outcome of a future event. Oracles are used to definitively report whether the condition specified in the contract was met.
For example, an oracle reports if the BTC price is above a certain threshold at a specific time. The oracle's verifiable data submission triggers the smart contract to pay out the winner and close the contract, automating the settlement process.
Glossar
Oracles
Attestation ⎊ Within decentralized finance and sustainable blockchain ecosystems, attestation functions as a critical oracle service, verifying off-chain data integrity and provenance for on-chain smart contracts.
Binary Option
Option ⎊ A binary option is a type of exotic derivative contract characterized by a discontinuous, all-or-nothing payout structure at expiration.
Verifiable Data Submission
Proof ⎊ Verifiable data submission mandates that every price report transmitted by an oracle node must include cryptographic proof, typically a digital signature, that confirms the data's origin and immutability.
Binary Options
Derivative ⎊ Cryptocurrency-based binary options represent a specialized subset of options contracts, intrinsically linked to the price movement of digital assets.