What Is the Difference between an American and a European Option in the Context of Oracle Use?

The difference lies in when the oracle price is needed. A European option can only be exercised at its expiration date, so the oracle is only required to provide the final, definitive settlement price at that single moment.

An American option can be exercised at any time up to and including the expiration date. While the oracle still provides the final settlement price, the protocol must also constantly monitor the oracle feed for real-time pricing to allow for early exercise.