Derive Protocol has seen a significant uptick in its on-chain options market, underscoring the growing appetite for cryptocurrency-based derivatives. This surge is part of a broader trend within decentralized finance (DeFi), where interest in innovative products like options, perpetual contracts, and structured products continues to grow.
According to recent reports, Derive has crossed a major milestone, with its total value locked (TVL) surpassing $100 million for the first time. This comes alongside record-breaking trading volumes and a substantial increase in the number of active traders using the platform.
“Derive.xyz has experienced impressive growth, surpassing $100 million in TVL for the first time, and setting new records in trading volume and monthly active users,” said Sean Dawson, Head of Research at Derive, in an interview with CoinDesk.
Dawson also mentioned that yields on USDC deposits on the platform have reached 10%, while the protocol has seen all-time highs in notional volume at $369 million, with 5,416 monthly active trades.
The Derive platform is composed of three key components: Derive Chain, which facilitates transaction settlement; Derive Protocol, enabling permissionless margin trading for options, perpetuals, and spot assets; and Derive Exchange, a decentralized order book. Together, these features provide a robust infrastructure for decentralized trading.
The growing activity on Derive mirrors a larger trend of rising demand for crypto-based derivatives. Options, in particular, are becoming increasingly popular as they allow traders to speculate on the future price movements of digital assets, with call options being used for bullish bets and put options for bearish bets.
One notable trade that caught attention last week involved a whale who sold BTC call options, earning over $1.6 million in premiums. This strategy, known as a covered call, saw the whale take short positions in BTC call options expiring in March, with strike prices ranging from $105,000 to $130,000. If Bitcoin stays below $105,000 by the end of March, the whale keeps the premium, but if the price climbs above $130,000, the whale’s spot position will offset any losses.
Another growing strategy among traders is using sUSDe—a token that accrues rewards by staking Ethena’s USDe stablecoin—as collateral to borrow USDC at competitive rates. Traders then use the borrowed USDC to purchase additional sUSDe, effectively repeating the cycle. These “DeFi carry trades” are proving highly lucrative, offering double-digit returns due to the spread between sUSDe’s 28% annualized yield and Derive’s borrowing rate of around 18% for USDC.
