Record Growth for Derive Protocol
The decentralized finance (DeFi) platform Derive Protocol has surpassed $100 million in Total Value Locked (TVL), marking a significant milestone. This growth aligns with a surge in demand for derivatives, particularly those tied to Bitcoin (BTC) and other cryptocurrencies.
The platform has also seen unprecedented trading volume and an increase in monthly active traders. According to Sean Dawson, head of research at Derive, the protocol has reached new heights, with a notable 10% yield on USDC deposits. Additionally, the platform has recorded $369 million in notional volume and 5,416 monthly active trades.
BTC Whales Make Waves with Options Strategies
A standout event on the platform involved a Bitcoin whale who utilized a covered call strategy to collect over $1.6 million in premium. This strategy involves selling BTC call options while holding a long position in the spot market. The calls, expiring in March, were sold with strike prices ranging from $105,000 to $130,000.
If Bitcoin stays below $105,000 by March, the whale retains the premium. However, if Bitcoin surpasses $130,000, the long spot position will offset any potential losses from the call options.
Derive Protocol’s DeFi Carry Trades Offer High Returns
Another key activity on Derive is the DeFi carry trade, where traders use sUSDe (a reward-bearing token) as collateral to borrow USDC at a competitive interest rate. This trade allows users to earn double-digit returns due to the positive spread between the yield on sUSDe (28% annually) and Derive’s borrowing rate for USDC (around 18%).
The Growing Popularity of Crypto Derivatives
The spike in activity on Derive Protocol reflects broader trends in the cryptocurrency market, where derivatives such as options are becoming increasingly popular. These financial instruments offer users the flexibility to place bullish or bearish bets on an asset’s price movement without directly owning it. In a call option, the buyer has the right to purchase the asset at a set price, while a put option gives the right to sell at a predetermined price.
The rise of Derive Protocol and the growing dominance of Bitcoin whales in options trading highlight the increasing sophistication of the cryptocurrency market. As demand for crypto derivatives continues to rise, platforms like Derive are poised to play a significant role in shaping the future of decentralized finance. The introduction of yield-bearing tokens and covered call strategies adds new layers of complexity and opportunity for traders in the rapidly evolving crypto landscape.
