Derive Protocol has seen remarkable growth in its on-chain options market, reflecting the increasing demand for cryptocurrency-based derivatives. This surge in activity is consistent with the broader trend of growing interest in derivatives tied to Bitcoin (BTC) and other digital assets.

According to CoinDesk’s latest report, decentralized finance (DeFi) platforms, such as Derive, are gaining traction by offering programmable on-chain options, perpetual contracts, and structured products. Derive has reached a significant milestone, surpassing $100 million in total value locked (TVL), alongside record trading volumes and a growing number of active traders.

“Derive.xyz has achieved substantial growth, with TVL surpassing $100 million for the first time, coupled with record-setting weekly trading volumes and active traders,” Sean Dawson, Head of Research at Derive, shared in an email to CoinDesk.

Dawson also noted that USDC deposit yields on Derive have reached 10%, while the platform recorded all-time highs in notional volume, reaching $369 million, and a surge in monthly active trades, which hit 5,416.

The Derive ecosystem includes Derive Chain, a transaction settlement layer; Derive Protocol, which allows permissionless margin trading of perpetuals, options, and spot assets; and Derive Exchange, an order book platform. Together, these components provide users with a seamless experience for decentralized trading.

The surge in activity on Derive aligns with the growing demand for cryptocurrency options and related investment vehicles, such as spot ETFs and crypto stocks. Options contracts give the buyer the right, but not the obligation, to buy or sell an underlying asset at a set price before a specific expiration date. A “call” option represents a bullish bet, while a “put” option represents a bearish bet.

One notable example of trading strategy involved a whale selling BTC call options and collecting over $1.6 million in premiums. This covered call strategy involved short positions in March-expiry BTC call options with strike prices ranging from $105,000 to $130,000. If Bitcoin remains below $105,000 by the expiration, the whale keeps the premium. Conversely, if BTC exceeds $130,000, the whale’s spot position compensates for the potential losses.

Another favored strategy has been posting sUSDe— a reward-bearing token earned by staking Ethena’s USDe stablecoin—as collateral on Derive to borrow USDC at competitive rates, which are lower than those offered by other lending platforms. Traders then use the borrowed USDC to purchase more sUSDe, repeating the cycle for higher returns. These “DeFi carry trades” generate double-digit yields due to the positive spread between sUSDe’s 28% annualized yield and Derive’s borrowing rate of around 18% for USDC.