Interview: Derive Co-Founder Nick Forster on "Building the Onchain CME"

“Historically, options have been the last instrument to mature in any market. They require deep spot liquidity, a meaningful base of institutional participants, and developed futures markets for hedging. This build-out just takes time, and I believe for crypto, those prerequisites are only now beginning to fall into place.  

Additionally, there simply wasn’t much demand for options in most of DeFi’s history. Yield was abundant and relatively easy to access, which made more complex instruments unnecessary. From 2021 through early 2025, strategies like the basis trade generated consistent returns, and platforms such as Pendle allowed users to turn token incentives into fixed-income-like products. At their peak, these strategies offered 20-30% annual returns with limited perceived risk.”

“The earlier described yield environment has now changed. Arbitrage yields compressed as institutional capital entered the market, and token-based incentives lost much of their appeal as new launches underperformed. With “easy yield” largely gone, capital is increasingly looking for strategies where risk and payoff are clearly defined.

This is where options come in. Options allow traders to structure risk precisely, express specific views, and build strategies that don’t rely on ongoing yield subsidies. As markets mature, demand naturally moves toward instruments with transparent outcomes.  

At the same time, onchain infrastructure has caught up. One of the largest neobanks is now building a structured product on top of Derive: a vault that algorithmically runs option-based strategies. The team initially tried to build this on Deribit, the largest centralized options venue, but ran into limitations tied to offchain infrastructure. Those constraints don’t exist onchain, which is why we’re seeing real adoption emerge now rather than earlier.” 

“First, options offer far greater flexibility. By combining calls and puts, traders can construct almost any payoff, target risk precisely, hedge exposures, and generate yield sustainably. This allows for things like volatility trading, structured products, and interest-rate hedging.  

Options also offer what perpetuals simply cannot: liquidation-free leverage on long-term positions. You pay a premium upfront, and outcomes depend solely on your thesis at expiration, not interim volatility. For institutions holding significant assets onchain, this makes options the natural instrument for sophisticated strategies.”

“Our focus is establishing Derive as the default venue for crypto options. We launched $HYPE options a month ago and are now the most liquid market globally, growing around 200% month over month since November.  

We are also entering OTC. Today, OTC crypto options are dominated by bilateral agreements that take months to set up, lock traders into a single counterparty, and offer limited price competition. Our model lets institutions keep custody with their preferred provider while sourcing liquidity from 10-20 competing market makers, trading dynamically with tighter pricing.

If we execute well, I expect us to capture 10-20% of Deribit’s market share. Longer-term, the opportunity is even bigger. Crypto options volumes would need to grow significantly to reach parity with options’ share of futures in traditional markets. And I expect this gap to close faster than most believe.”

“The catalyst is Hyperliquid. The opportunity was large enough that institutional firms invested heavily in building the workflows needed to trade onchain, with most of that work completed in late 2025. Once those systems are in place, expanding into broader DeFi, and particularly options, becomes straightforward.

This momentum is reinforced by major unlocks on the infrastructure side, such as our recently launched off-exchange custody solution. It allows institutions to trade options onchain while keeping assets with their chosen custodian, eliminating bridging, wrapping and smart-contract risk. So, it is really the combination of maturing infrastructure alongside growing liquidity and sustained demand for onchain yields that makes me optimistic about 2026.”