Derive is a rising category king in DeFi, the market leader in onchain options. Despite the treacherous crypto bear market, DeFi’s longest standing platform for onchain options has managed to trend higher month-over-month in key metrics such as notional volume, fees and unique traders. Less than 10 days into September, Derive looks on pace to potentially achieve a new all-time-high in monthly notional volume.
Back in March, we interviewed the CoFounder and CEO Nick Forster about what makes Derive such a magnet for options traders and how they were winning them over from centralized players like Deribit. We invited him back with Derive V3 on the cusp of shipping any day now in September.
A few things worth knowing going into this episode:
1000x market growth opportunity: The total addressable market for onchain options is enormous and still barely touched compared to legacy options markets. The global options market is a multi-trillion dollar opportunity. Onchain options are still in the very early innings, with V2 having proved the infrastructure could settle billions, but that's a rounding error with what the full market represents. Nick says V3 is about positioning for trillions.
Ethereum seems the most likely home for V3: Nick is direct about why fracturing liquidity across chains is a fundamental mistake for an options protocol. You need to be in one place. Ethereum's credible neutrality means Derive will never have to worry about the chain they build on competing with them or chopping their head off if they get too big.
Like you don't want to deploy where you know, if you get big enough, you're probably gonna get your head chopped off. I think that's a fundamentally limiting proposition, and it makes me wary of some of the bigger exchange-based chains. I think that is what Ethereum candidly has really going for it in a way that, you know, that it's not a bug, it's a feature that they are in a way so non-visible on the deployer side. Even when I look at like a Solana… they're just kind of picking winners. You see them kind of talking about a specific perps DEX that, you know, goes through their orderbook, which to me, again, is just like trying to make too many decisions for builders. The hands-off approach for Ethereum is, well, I know for sure they're not gonna compete with me. I know for sure they're not gonna pick up another project in six months and start shilling it. I know for sure that they're not gonna try and like rob me of my core economics or like really try and have an opinion on how we should design and bring our orderbook onchain versus off-chain. That credible neutrality is something that is impossible to replicate, I would say, at this point. and I think really do think that network effect is so entrenched."
Tokenized stocks and RWAs change everything: The arrival of real-world assets and tokenized equities as collateral and underlying assets dramatically expands what's possible on Derive. Institutions that previously had no reason to look at onchain options now have a compelling reason to show up.
V3 ships any day now in September. The testnet is live for builders right now.
Listen to the latest Edge Podcast for more details! If V3 delivers on its promise, Derive could do for onchain options what Lighter did for perps on Ethereum, and the September launch will be the first test of that thesis.
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🔗 Guest Links 🔗
► Derive website: derive.xyz
► Derive on X: x.com/DeriveXYZ
► Nick Forster on X: x.com/nickforster
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DISCLAIMER: Nothing said on The Edge Podcast is a recommendation to buy or sell tokens or securities. This content is for educational and entertainment purposes only. Nothing shared here is financial advice. Any views expressed by hosts or guests on the show are solely their opinions. Always do your own research. DeFi Dad, Nomatic, and guests may have positions in the assets or other matters discussed in this podcast. DeFi Dad has entered a spot position in DRV since recording this interview.
