Derive.xyz Incentive Proposal

Incentives
1

Protocol/Gauge Name:

Derive.xyz

Protocol Description:

Derive is the institutional-grade decentralized options and perps exchange built on an OP Stack L2. With a CEX-speed orderbook, portfolio margin, and support for 18+ collateral types (now including pufETH) we enable capital-efficient derivatives trading for funds, structured-product desks, and advanced DeFi users.

Protocol Overview:

Derive is a high-performance, self-custodial derivatives venue offering options and perpetual futures with the speed and reliability of a centralized exchange, but fully onchain. Built on its own OP Stack L2, Derive provides low-latency execution, portfolio margining, multi-asset collateral, and an institutional RFQ system targeted at professional traders, treasuries, and sophisticated DeFi users. We have over $20 million TVL being used organically from ETH Staking tokens as collateral so the team can expect large adoption.

With pufETH newly added as collateral, Derive enables restaked ETH to margin options and perps without unwinding staking exposure. pufETH holders can now farm volatility and borrow USDC at a variable or fixed rate with their collateral.

Key Features:

  • Institutional-grade derivatives: Orderbook + RFQ execution, portfolio margining, multi-asset collateral.

  • Self-custodial security: Fully onchain, transparent risk engine, audited contracts, no custody risk and institutional integrations (Fireblocks, Copper, Anchorage).

  • Capital efficiency: Use pufETH to margin options/perps while retaining staking + restaking yield.

  • CEX-level performance: Low latency, deep RFQ liquidity, and competitive spreads.

  • Composability: 18+ collateral types, with pufETH integrated directly into risk calculations.

  • Diverse volatility strategies: Covered calls, basis trades, spreads, cash-secured puts, structured vaults.

Distribution Method:

Merkl (open to Puffer suggestion based on optimal user-level distribution).

Pool Addresses:

Ethereum Mainnet: 0xfeF430377E7ed9bF5E4cadC41C709BF4BB6235fE

Incentive Impact Statement:

Season 2 incentives for pufETH on Derive will accelerate adoption of restaked ETH as onchain derivatives collateral. Incentives will:

  • Bootstrap usage of pufETH for margining options and perps, increasing its utility beyond passive staking; pushing DeFi toward productive ETH collateral.

  • Attract treasuries, structured-product desks, and DATs already deploying pufETH into yield strategies.

  • Enable users to stack restaking yield plus volatility premium through covered calls, basis trades, and spreads.

  • Deepen liquidity and trading activity around pufETH-margined markets, fostering long-term habit formation.

These incentives help establish pufETH as a core building block for institutional-grade onchain trading.

Eligibility Verification:

Please create a PR with your logo in the https://github.com/PufferFinance/puffer-assets/logos folder, format should be a square logo (of any dimensions) in PNG or SVG format.

Pull request from DillonLin on Github: https://github.com/PufferFinance/puffer-assets/pull/10/files

Any Other Resources e.g. direct URL to pool, docs, etc.

Contact Information:

Provide contact details for further discussions, such as an email address, Telegram handle, or Discord username.

  • Email 1: ksett@derivelabs.xyz

  • Email 2: dillon@derivelabs.xyz

  • Telegram 1: @ksett2313

  • Telegram 2: @dillonlin

Questions for the Puffer Team or Community (Optional):

  1. Are there specific pufETH-based markets (options expiries, spreads, perpetual pairs) the community would like prioritized?

  2. Would Puffer prefer targeted incentives for structured strategies (e.g., pufETH covered-call vaults) or general margin usage incentives?

3 Likes
2

Upvote for the proposal :palms_up_together:t2::dizzy:

1 Like
3

So excited to see pufETH as collateral to do trading on Derive. It increases the capital efficiency for pufETH holders who want to participate spot, perp and options trading marketing by still holding pufETH.

Looking forward to seeing pufETH as assets listed in perp/option marketing in the future.

4

Been following Ksett and the team building since Derive’s early days as Lyra. Solid team, solid project, and it’s great to see this integration being explored.

Upvoted!