Derive Protocol Surpasses $100 Million in Total Value Locked
Decentralized Finance (DeFi) platform Derive Protocol has surpassed $100 million in Total Value Locked (TVL), driven by increased trading volume and a rise in monthly active traders. This growth indicates heightened interest in derivatives linked to Bitcoin and other cryptocurrencies.
Traders’ Demand for Options Drive Derive's Record Activity
Sean Dawson, Head of Research at Derive, stated:
“Derive.xyz's latest market insights reveal remarkable growth and heightened activity, with its total value locked surpassing $100 million for the first time, amid record-setting weeks for trading volume and active traders.”
This increase in activity correlates with strong demand for cryptocurrency options and a preference for digital asset investment vehicles, including spot Exchange Traded Funds (ETFs). Options provide buyers the right to buy or sell an underlying asset at a predetermined price later. A call option allows purchase and signifies a bullish bet, while a put option indicates a bearish bet. Recently, one whale earned over $1.6 million from BTC call sales, employing a covered call strategy against a long position in the spot market.
The strategy involved short positions in March expiry call options with strike prices between $105,000 and $130,000. If Bitcoin remains below $105,000 by the end of March, the whale retains the premium; however, losses from potential price increases above $130,000 will be mitigated by long positions in the spot market.
Additionally, traders can post staked USDe (sUSDe) as collateral on Derive to borrow USDC at lower rates compared to other lending protocols. sUSDe is earned by staking Ethena’s USDe stablecoin, creating a repetitive cycle.
Derive Protocol Records More Milestones
Dawson highlighted that the USDC deposit yield has risen to 10% on Derive.xyz. The platform also achieved an all-time high in notional volume at $369 million and recorded 5,416 monthly active trades.
The Derive platform comprises the Derive Chain, which serves as a transaction settlement layer, enabling permissionless, self-custodial margin trading of perpetuals, options, and spot assets. Derive Exchange functions as an order book.
Recent news of Derive Protocol’s increasing TVL follows its collaboration with Ethena Labs, set to launch the native DRV token on January 15, 2025. This partnership aims to enhance trading tools like options, futures, and structured product vaults, with Ethena integrating these into its operations.
As a result, Derive Protocol will enhance its liquidity and trading volume using Ethena’s USDe and sUSDe as leverage.