# How Are Oracles Used to Settle Binary Options Contracts? ⎊ Path

**Published:** 2025-12-05
**Author:** Greeks.live
**Categories:** Path

---

## 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.

- [What Is a “Barrier Option” and How Might TWAP Be Incorporated into Its Payout Structure?](https://learn.greeks.live/path/what-is-a-barrier-option-and-how-might-twap-be-incorporated-into-its-payout-structure/)

- [What Is a ‘Contingent Claim’ and How Is It Settled by an Oracle?](https://learn.greeks.live/path/what-is-a-contingent-claim-and-how-is-it-settled-by-an-oracle/)

- [What Is the Concept of a “Credit Event” in a Credit Default Swap (CDS)?](https://learn.greeks.live/path/what-is-the-concept-of-a-credit-event-in-a-credit-default-swap-cds/)

- [How Can Options Traders Report Suspected Fraud or Manipulation to the CFTC?](https://learn.greeks.live/path/how-can-options-traders-report-suspected-fraud-or-manipulation-to-the-cftc/)

- [What Is a ‘Binary Option’ and How Does Its Settlement Fundamentally Differ?](https://learn.greeks.live/path/what-is-a-binary-option-and-how-does-its-settlement-fundamentally-differ/)

- [How Does a PoR Oracle Differ from a Standard Price Oracle?](https://learn.greeks.live/path/how-does-a-por-oracle-differ-from-a-standard-price-oracle/)

- [Can a non-US Custodian Obtain a SOC 2 Report?](https://learn.greeks.live/path/can-a-non-us-custodian-obtain-a-soc-2-report/)

- [What Is an Example of a Real-World Event That Requires a Decentralized Oracle for a Financial Contract?](https://learn.greeks.live/path/what-is-an-example-of-a-real-world-event-that-requires-a-decentralized-oracle-for-a-financial-contract/)

## Glossar

### [Oracles](https://learn.greeks.live/area/oracles/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

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](https://learn.greeks.live/area/binary-option/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

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](https://learn.greeks.live/area/verifiable-data-submission/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

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](https://learn.greeks.live/area/binary-options/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Derivative ⎊ Cryptocurrency-based binary options represent a specialized subset of options contracts, intrinsically linked to the price movement of digital assets.

## Discover More

### [How Do Oracles Facilitate the Calculation of Option Premiums?](https://learn.greeks.live/path/how-do-oracles-facilitate-the-calculation-of-option-premiums/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Do Oracles Facilitate the Calculation of Option Premiums?](https://learn.greeks.live/wp-content/uploads/2025/10/Conceptualization-of-Decentralized-Finance-Oracles-With-High-Frequency-Market-Data-Acquisition.webp)

Oracles provide the crucial, real-time spot price of the underlying asset, which is a key input for the option premium calculation model.

### [What Is the Role of Decentralized Oracles in Ensuring the Security and Reliability of DeFi Platforms?](https://learn.greeks.live/path/what-is-the-role-of-decentralized-oracles-in-ensuring-the-security-and-reliability-of-defi-platforms/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Role of Decentralized Oracles in Ensuring the Security and Reliability of DeFi Platforms?](https://learn.greeks.live/wp-content/uploads/2025/10/Decentralized-Exchange-Structure-Visualizing-Collateralized-Non-Deliverable-Forward-Contract-Mechanics.webp)

Decentralized oracles are essential for the security and reliability of DeFi platforms.

### [How Do Options Contracts with a De-Pegged Stablecoin as the Underlying Asset Settle?](https://learn.greeks.live/path/how-do-options-contracts-with-a-de-pegged-stablecoin-as-the-underlying-asset-settle/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Do Options Contracts with a De-Pegged Stablecoin as the Underlying Asset Settle?](https://learn.greeks.live/wp-content/uploads/2025/10/Streamlined-Token-Structure-Encapsulating-Digital-Asset-Volatility-Premium-Derivations-Across-Exchanges.webp)

Options are cash-settled based on the de-pe

### [What Is the Risk of Using a Subjective Oracle for a Binary Option?](https://learn.greeks.live/path/what-is-the-risk-of-using-a-subjective-oracle-for-a-binary-option/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Risk of Using a Subjective Oracle for a Binary Option?](https://learn.greeks.live/wp-content/uploads/2025/10/Decentralized-Finance-Protocol-Interface-Securing-Parametric-Futures-Contract-Collateralization-Mechanisms.webp)

Subjective oracles risk disputes and manipulation because the event outcome is open to interpretation, hindering trustless settlement.

### [Can Cross-Chain Communication Protocols Reduce Reliance on Single-Source Oracles for Asset Pricing?](https://learn.greeks.live/path/can-cross-chain-communication-protocols-reduce-reliance-on-single-source-oracles-for-asset-pricing/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Can Cross-Chain Communication Protocols Reduce Reliance on Single-Source Oracles for Asset Pricing?](https://learn.greeks.live/wp-content/uploads/2025/10/Quantum-Entanglement-Energy-Flow-Modeling-Decentralized-Finance-Derivative-Pricing-Mechanisms.webp)

Yes, cross-chain protocols allow contracts to fetch and compare asset prices directly from DEXs on multiple blockchains.

### [How Do TWAP and VWAP Oracles Source Their Price and Volume Data?](https://learn.greeks.live/path/how-do-twap-and-vwap-oracles-source-their-price-and-volume-data/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Do TWAP and VWAP Oracles Source Their Price and Volume Data?](https://learn.greeks.live/wp-content/uploads/2025/10/Geometric-Abstraction-of-a-Quantum-Leap-in-Decentralized-Finance-Options-Hedging-Strategy-Execution.webp)

TWAP and VWAP oracles source their data from on-chain DEXs or off-chain aggregators of CEX and DEX data.

### [How Are Oracles Used to Settle Perpetual Futures Contracts On-Chain?](https://learn.greeks.live/path/how-are-oracles-used-to-settle-perpetual-futures-contracts-on-chain/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Are Oracles Used to Settle Perpetual Futures Contracts On-Chain?](https://learn.greeks.live/wp-content/uploads/2025/10/Layered-Color-Bands-Representing-Stochastic-Volatility-Surface-Dynamics-and-Dual-Asset-Moon-Concepts.webp)

Oracles provide the index price for calculating funding rates and automatically triggering liquidation of underwater positions.

### [Why Are Perpetual Futures Contracts Often Used to Delta-Hedge Crypto Options?](https://learn.greeks.live/path/why-are-perpetual-futures-contracts-often-used-to-delta-hedge-crypto-options/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Why Are Perpetual Futures Contracts Often Used to Delta-Hedge Crypto Options?](https://learn.greeks.live/wp-content/uploads/2025/10/Xenomorphic-Delta-Wing-Flight-Dynamics-Visualized-Through-Dark-Mode-Digital-Asset-Portfolio-Convergence-Schematics.webp)

They offer high liquidity, leverage, and lower transaction costs, making them efficient for the frequent adjustments of Delta hedging.

### [How Can Smart Contracts and Traditional Legal Contracts Be Integrated to Work Together?](https://learn.greeks.live/path/how-can-smart-contracts-and-traditional-legal-contracts-be-integrated-to-work-together/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Can Smart Contracts and Traditional Legal Contracts Be Integrated to Work Together?](https://learn.greeks.live/wp-content/uploads/2025/10/Asymmetric-Hedging-Instruments-Visualized-Against-Segmented-Latent-Variable-Block-Structure.webp)

They can be integrated by using a traditional legal contract to define terms and provide legal recourse, while a smart contract automates execution.

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