Key Highlights:
- The Derive protocol's Total Value Locked (TVL) has exceeded $100 million.
- A whale earned over $1.6 million in premiums from selling Bitcoin (BTC) options.
- Participants are depositing sUSDe to borrow USDC for yield.
CoinDesk reported that options trading is on the rise due to increased demand for cryptocurrency derivatives. Recently, Record activity has been observed within decentralized finance (DeFi), which includes programmable on-chain options and structured products.
The total dollar value of tokens locked in Derive has crossed the $100 million mark, reflecting a spike in trading volume and active traders.
“The latest insights from Derive.xyz indicate significant growth; the total value locked has crossed $100 million, driven by unprecedented trading volume and user activity,” stated Sean Dawson, Head of Research at Derive.
Dawson further explained that USDC deposits are yielding 10%, with total notional volume hitting $369 million and monthly active trades reaching 5,416.
The Derive platform consists of multiple components:
- Derive Chain: A settlement layer for transactions.
- Derive Protocol: Allows permissionless trading for perpetuals, options, and spot markets.
- Derive Exchange: Features an order book.
The surge in activity is a reflection of the broader demand for investment strategies involving cryptocurrencies and digital asset-related vehicles such as Spot ETFs.
Options Overview:
Options are contractual agreements allowing the buyer to buy or sell an underlying asset at a set price. A call option represents a bullish market projection while a put option signifies bearish expectations.
Whale's Strategy:
Recently, a whale utilized a strategy selling BTC call options for over $1.6 million in premiums, maintaining a position in the spot market. This covered call strategy involved selling March-expiry options at strike prices between $105,000 and $130,000. Should BTC remain below $105,000 by March’s end, the whale collects the premium; if it exceeds $130,000, losses will be offset by gains in their long spot position.
A favored tactic among traders includes using sUSDe as collateral to borrow USDC, which leads to a cycle of buying and borrowing, yielding double-digit returns due to favorable interest spreads between the market rates.
Derive founder Nick Froster's insights
Image Source: Derive founder Nick Froster's post on X
