Derive Protocol Hits $100M in Value Locked Amid Growing Activity from Bitcoin Whales in Options Trading

Derive Protocol has experienced a significant surge in activity within its on-chain options market, reflecting the broader rising demand for cryptocurrency-based derivatives. This growing interest mirrors the increased demand for derivatives linked to Bitcoin (BTC) and other crypto assets, as more investors turn to these products for enhanced market exposure.

As CoinDesk reported, the DeFi space is witnessing an uptick in derivatives, including options, perpetual contracts, and structured products, with Derive standing out as a leading platform in this area. The protocol’s total value locked (TVL) has surpassed the $100 million mark, accompanied by record-breaking trading volumes and an increase in monthly active traders.

“Derive.xyz’s market insights reveal remarkable growth, with TVL crossing $100 million for the first time, and record-setting weeks in terms of trading volume and active users,” said Sean Dawson, Head of Research at Derive, in an email to CoinDesk.

Additionally, Dawson highlighted that yields on all USDC deposits on the platform have reached an impressive 10%, and the platform has also seen all-time highs in notional volume at $369 million, with monthly active trades reaching 5,416.

The Derive ecosystem consists of three primary components: Derive Chain (which facilitates transaction settlement), Derive Protocol (enabling permissionless, self-custodial margin trading for options, perpetuals, and spot), and Derive Exchange (a decentralized order book). This structure offers users a versatile and decentralized environment to engage in trading.

The activity on Derive aligns with the growing appetite for options contracts tied to digital assets and crypto-related investment products, such as spot ETFs and crypto equities. Options are a type of derivative that grants the buyer the right, but not the obligation, to buy or sell an asset at a predetermined price within a specific timeframe. Call options represent a bullish position, while put options are bearish.

One notable trade in the past week involved a whale who sold BTC call options, collecting over $1.6 million in premiums. This strategy, known as a covered call, involved taking short positions in March-expiring BTC call options with strike prices ranging from $105,000 to $130,000. If Bitcoin remains below $105,000 by March’s end, the whale retains the premium. However, if BTC surges above $130,000, the long position in the spot market will balance the potential losses.

Another favored strategy among traders has been using sUSDe—a token that earns rewards through staking Ethena’s USDe stablecoin—as collateral to borrow USDC on Derive at more favorable rates compared to other platforms. Traders then use the borrowed USDC to acquire more sUSDe, creating a profitable cycle. These “DeFi carry trades” yield double-digit returns due to the positive spread between sUSDe’s 28% annual yield and Derive’s borrowing rate of approximately 18% for USDC.