Derive Protocol has made history with its locked value jumping above the $100 million mark.
Decentralized Finance (DeFi) platform Derive Protocol has crossed $100 million in Total Value Locked (TVL). This follows an outstanding record of trading volume and monthly active traders. This latest development reflects the growing demand for derivatives associated with Bitcoin BTC $84 340 24h volatility: 0.9% Market cap: $1.67 T Vol. 24h: $30.46 B and other cryptocurrencies.
Traders’ Demand for Options Drive Derive’s Record Activity
In an email, Sean Dawson, the Head of Research at Derive, noted:
“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 surge in Derive activity is consistent with the massive demand for options linked to cryptocurrencies. It is also based on affinity for other digital assets-related investment vehicles like spot Exchange Traded Funds (ETFs) and stocks. Often, options give buyers the right to either buy or sell the underlying asset at a predetermined price later.
Similarly, a call allows a purchaser to buy and represents a bullish bet on the market. A put is quite different from a call as it indicates a bearish bet. A week ago, one whale earned over $1.6 million in premiums from BTC call sales.
Precisely, this was completed against a long position in the spot market. It is worth noting that the covered call strategy involved short positions in March expiry call options at strike prices, ranging from $105,000 to $130,000.
Should Bitcoin remain below $105,000 by the end of March, this whale retains the premium. On the other hand, compensation for losses that stem from a possible price rally above $130,000 will happen with long positions in the spot market.
At other times, traders post staked USDe (sUSDe) as collateral on Derive to enable them to borrow USDC USDC $1.00 24h volatility: 0.0% Market cap: $60.08 B Vol. 24h: $8.53 B at rates that are quite lower than other lending protocols.
sUSDe is a reward-bearing token earned by staking Ethena’s USDe stablecoin. Again, the same is utilized for purchasing sUSDe, causing the cycle to be repetitive.
Derive Protocol Records More Milestones
Meanwhile, Dawson also pointed out that the USDC deposit yield has surged to 10% on Derive.xyz. In addition, it has also hit all-time high (ATH) in notional volume at $369 million and monthly active trades at 5,416.
The Derive platform is a conglomerate of the Derive Chain, a transaction settlement layer. The Derive Protocol enables permissionless, self-custodial margin trading of perpetual, options, and spot. To complement this protocol, there is also Derive Exchange, which serves as an order book.
The news of Derive Protocol’s increasing TVL comes one week after it became known about its new collaboration with Ethena Labs. This linkup will see it launch its native DRV token on January 15, 2025. Derive will contribute to the alliance’s advanced trading tools, such as options, futures, and structured product vaults. Ethena will then incorporate these into its operations.
As an advantage, Derive Protocol will boost its liquidity and trading volume using Ethena’s USDe USDe $1.00 24h volatility: 0.1% Market cap: $5.26 B Vol. 24h: $139.44 M and sUSDe as leverage.
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