Chainfeeds Summary:
These changes do not guarantee that on-chain protocols will ultimately prevail, but what is certain is that the industry environment has changed.
Article source:
https://x.com/Delphi_Digital/status/2031764763307327498
Article Author:
Delphi Digital
Opinion:
Delphi Digital: The crypto options market is larger than many people realize. CME Group's crypto derivatives trading volume is currently 46% higher than last year's record high. For institutions, a clear risk boundary is needed when hedging large positions, and options are currently the only tool in the crypto market that can provide this capability. By mid-2025, total open interest in Bitcoin options reached $65 billion, surpassing futures open interest for the first time. Futures are essentially a leveraged instrument, while options allow funds to set a downside cap on a $500 million BTC position by paying a premium. This crossover means that derivatives with risk caps are gradually replacing simple leveraged instruments. Currently, this growth is mainly concentrated in two places. Deribit has been the default platform for crypto options trading for years. Coinbase's $2.9 billion acquisition of Deribit in 2025 gave it institutional-grade backing. Meanwhile, the launch of IBIT ETF options at the end of 2024 also brought traditional financial funds into the crypto options market. The options market is expanding rapidly, but almost all transactions are still completed through centralized intermediaries. The decentralized derivatives market share has grown from 2% to over 10% in the past two years. Hyperliquid has proven that a DEX can match the performance of centralized exchanges in terms of speed and transparency. However, no similar breakthrough has yet emerged in on-chain options. Currently, @DeriveXYZ remains the leading on-chain options protocol, with over $700 million in notional options trading volume in the past 30 days. The project was initially launched in August 2021 under the name Lyra, initially as an options AMM. It survived the bear market and was rebuilt from scratch in 2023: launching a gas-free Central Limit Order Book (CLOB) based on the OP Stack L2. This refactoring changed the pricing mechanism. Market makers can quote directly on the order book, enabling narrower spreads and more accurate prices at scale. Traders can achieve sub-second execution without paying gas fees. Another important mechanism attracting institutional attention is the Portfolio Margin system. It assesses the overall risk of all positions through scenario analysis. For example, when a trader simultaneously long on a call option and short on a put option on the same underlying asset, margin is not calculated separately for each leg. The collateral required for hedging positions is lower than the sum of individual positions—this is standard practice on traditional financial derivatives trading desks. Derive also runs perpetual contracts and lending operations on the same L2 platform, enabling cross-product margin sharing. Asset management institutions building structured products need a clear risk structure, which only options can provide. For example, JPMorgan's Equity Premium Income ETF, one of the world's largest actively managed funds, uses covered calls as its core strategy. The entire derivatives income product sector already manages over $100 billion. As more institutional funds enter the on-chain market, the same risk hedging needs will follow. Currently, more and more institutional investors already hold or plan to allocate to digital assets. The open interest of IBIT ETF options has exceeded that of gold ETF (GLD) options. In 2025, CME processed $3 trillion in notional trading volume in crypto derivatives. Most on-chain options protocols from the last cycle failed to survive, largely due to regulatory uncertainty. For example, Opyn was accused by the CFTC of being an unregistered derivatives exchange. Many teams developed their products without knowing whether their protocols would be declared illegal the following quarter. This situation is gradually changing. In September 2025, the SEC and CFTC issued a joint statement allowing spot crypto asset trading on regulated exchanges. Simultaneously, the US House of Representatives passed the CLARITY Act, proposing to transfer regulatory power over the digital goods spot market to the CFTC. The Senate version is still under negotiation and is currently stalled.
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