CoinDesk said last week that options are raining, pointing to rising demand for derivatives tied to Bitcoin (BTC) and other cryptocurrencies. Now, additional evidence has come to light in the form of recorded activity regarding decentralized finance (DeFi), which offers unique programmable on-chain options, perpetual, and structured products.
The total amount of crypto tokens locked (TVL) on Derive exceeded $100 million with record trading volumes and monthly active traders.
“Derive.xyz's latest market insights reveal impressive growth and increased activity, with total trading volumes exceeding $100 million for the first time, amid a record week of trading volumes and active traders.” said head of research Sean Dawson. Email from CoinDesk.
“At Derive.xyz, all USDC deposits are yielding 10%, with $369 million in notional value and record high monthly active trades at 5,416,” Dawson added. Ta.
The Derive platform consists of Derive Chain, a transaction settlement layer. Derive Protocol. Enables unauthorized, options, and physical self-custodial margin trading. And Derive Exchange, order book.
The record activity on Derive coincides with widespread demand for options related to cryptocurrencies and digital asset-related investment vehicles such as spot ETFs and stocks.
An option is a derivative contract that gives the buyer the right to buy or sell the underlying asset at a later, predetermined price. A call gives you the right to buy and represents a bullish bet on the market, while a put represents a bearish bet.
Whale sells BTC calls
Last week, sold whales collected over $1.6 million in premium by selling BTC calls against long positions in the spot market. The so-called covered call strategy involved a short position in March expiring call options at strike in the range of $105,000 to $130,000.
If Bitcoin stays below $105,000 by the end of March, the whales will maintain their premium. Conversely, a long position in the spot market will cover any losses from potential upside above $130,000.
Another strategy popular among traders is to pledge sUSDe, the rewarded token earned by staking Ethena's USDe stablecoin, as collateral for Derive, offering USDC at significantly lower interest rates than other lending protocols. It is to borrow. Use the same to buy sUSDe again and the cycle repeats.
So-called DeFi carry trades are generating double-digit returns due to the positive spread between sUSDe’s 28% annualized yield and Derive’s ongoing approximately 18% USDC borrowing rate.
