Derive Protocol Achieves $100M in Value Locked with Bitcoin Whales Taking Center Stage in Options Trading

Derive Protocol has experienced significant growth in its on-chain options market, highlighting the increasing demand for cryptocurrency-based derivatives. This surge in activity is reflective of a broader trend in decentralized finance (DeFi), with growing interest in products like options, perpetual contracts, and structured investment vehicles tied to digital assets.

As reported by CoinDesk, Derive has surpassed $100 million in total value locked (TVL), marking a new milestone for the platform, accompanied by record-breaking trading volumes and a rise in monthly active traders.

“Derive.xyz has seen impressive growth, with its total value locked surpassing $100 million for the first time, alongside unprecedented trading volumes and active user participation,” Sean Dawson, Head of Research at Derive, explained in an email to CoinDesk.

Dawson also shared that USDC deposits on the platform are earning yields of up to 10%, while Derive has set new records in both notional volume, hitting $369 million, and monthly active trades, reaching 5,416.

The Derive platform includes three main components: Derive Chain, which serves as a settlement layer for transactions; Derive Protocol, enabling permissionless, self-custodial margin trading for options, perpetuals, and spot assets; and Derive Exchange, an order book platform. These components work in tandem to offer users a comprehensive decentralized trading experience.

The growth of Derive’s options market coincides with a broader demand for crypto-related derivatives and investment products, including spot ETFs and crypto equities. Options are financial contracts that give traders the right, but not the obligation, to buy or sell an asset at a predetermined price before a specified expiration date. Call options are typically used for bullish bets, while put options are used for bearish strategies.

A prominent strategy observed recently involved a whale who sold BTC call options, collecting over $1.6 million in premiums. This covered call strategy involved short positions on BTC options set to expire in March, with strike prices ranging from $105,000 to $130,000. If Bitcoin remains below $105,000 by the end of March, the whale retains the premium. If BTC surges above $130,000, the spot position compensates for any potential losses.

Another strategy gaining popularity on Derive is using sUSDe—an earned reward token from staking Ethena’s USDe stablecoin—as collateral to borrow USDC at favorable rates. Traders then use the borrowed USDC to buy more sUSDe, creating a profitable cycle. These “DeFi carry trades” offer double-digit returns, driven by the spread between sUSDe’s 28% annual yield and Derive’s borrowing rate of around 18% for USDC.