Options Open Interest Exceeds Futures for the First Time: How Are On-Chain Derivatives Stepping Into the Eve of Explosive Growth?

Author: Delphi Digital

Translation: AididiaoJP, Foresight News

Original Title: The Eve of On-Chain Options Explosion

The size of the cryptocurrency options market far exceeds most people’s perceptions. The trading volume of crypto derivatives on the Chicago Mercantile Exchange (CME) has increased by 46% compared to the record high set last year. Institutional investors need clear risk management tools to hedge large positions, and options are the only crypto instruments that can provide this function.

Reshaping the Landscape

By mid-2025, the total open interest in Bitcoin options reached $65 billion, surpassing futures open interest for the first time. Futures are leveraged instruments, while options allow funds to set a loss cap on their $500 million Bitcoin holdings by paying a premium. This turning point indicates that tools with risk-defining capabilities are gradually replacing pure leverage instruments.

This growth is mainly concentrated on two platforms. Deribit has been a mainstream platform for crypto options trading for years, and after being acquired by Coinbase for $2.9 billion in 2025, it gained institutional backing. Meanwhile, IBIT options, launched at the end of 2024, has brought traditional financial capital into this space. The options market is expanding rapidly, but most trading still occurs through intermediaries.

On-Chain Options Are Still in Their Infancy

Decentralized derivatives market share has grown from 2% to over 10% in two years. Hyperliquid has demonstrated that decentralized exchanges (DEXs) can match centralized exchanges in speed and transparency. However, on-chain options have yet to see projects of similar prominence.

@DeriveXYZ remains the leading on-chain options protocol, with over $700 million in nominal options traded in the past 30 days. The protocol was launched in August 2021 under the name Lyra as an automated market maker (AMM) for options. After a bear market, it was fully rebuilt in 2023, now based on its own OP Stack Layer 2, offering a fee-free central limit order book.

This rebuild has fundamentally changed the pricing mechanism. Market makers now quote directly on the order book, narrowing spreads, enabling more precise pricing, and supporting larger trades. Traders enjoy zero gas fees and sub-second execution speeds.

Its collateral margin system also attracts institutional attention. The system assesses overall position risk through scenario analysis. For example, if a trader holds both a long call and a short put on the same underlying, the system does not require margin for each leg separately.

The margin required after hedging is lower than the sum of individual parts, which aligns with traditional financial derivatives trading logic. Derive also offers perpetual contracts and lending services on the same Layer 2, supporting cross-product cross-margin.

@KyanExchange is progressing in a different way toward the same goal. The platform combines an order book matching engine with on-chain portfolio margin, enabling multi-leg operations within a single atomic transaction. Traders can deploy iron condor strategies with just a few clicks.

Kyan’s liquidation mechanism also differs from most DeFi protocols. When margin thresholds are breached, the platform does not liquidate the entire account but executes partial liquidations, closing only the minimum positions needed to restore margin requirements. Kyan is currently in testing on Arbitrum, with mainnet launch imminent.

Who Needs Options?

Asset management firms building structured products urgently require the clearly defined risk-reward structures that options provide. For example, JPMorgan’s equity premium income ETF, built on a covered call strategy, is one of the largest actively managed funds globally. Overall, derivatives-based income products manage over a trillion dollars. As more institutional funds enter on-chain, the demand for hedging will also grow.

Currently, more institutional investors hold or plan to allocate to digital assets in the short term. Open interest in IBIT options has surpassed that of gold ETFs like GLD. By 2025, CME processed $30 trillion in nominal trading volume of crypto derivatives.

The Timing Is Maturing

Most early on-chain options protocols failed, mainly due to regulatory uncertainty. For example, Opyn was penalized by the CFTC for operating an unlicensed derivatives exchange. At that time, the team could not predict whether their product would be deemed illegal in the next quarter.

This situation is improving. In September 2025, the U.S. SEC and CFTC jointly issued a statement allowing regulated exchanges to conduct spot crypto asset trading. The CLARITY Act has passed the House, proposing to bring the spot digital commodity market under CFTC regulation. The Senate version is still under negotiation and currently on hold. CME Group will launch 24/7 crypto options trading on May 29. While this does not guarantee that on-chain protocols will necessarily prevail, the overall environment has undergone a significant shift.