Deribit Launches USDC-Priced Linear Options and Futures, Reducing Volatility Risk and Enhancing Capital Efficiency, Attracting Traditional Institutional Funds into the Crypto Derivatives Market
Background: Coinbase to Launch Tokenized Stocks, Prediction Markets, and IEO in the United States: Moving Towards a Universal Exchange
Supplementary Background: Coinbase Integrates Samsung Pay: One-Click Cryptocurrency Purchase with Samsung Pay, Initially Available to Users in the U.S. and Canada
USDC-Priced Linear Options Debut
Deribit will launch USDC-priced BTC and ETH linear options on August 19, along with USDC perpetual futures and an expansion of the PAXG product line, symbolizing a significant move towards stablecoin settlement in the crypto derivatives market.
Introduction of USDC Settlement Linear Options
Deribit announced this week the introduction of USDC linear options, with profits and losses settled in dollar-pegged stablecoins, relieving investors from the margin fluctuations caused by the volatility of the underlying assets. The minimum contract order size is set at 0.01 BTC and 0.1 ETH, lowering the trading threshold and potentially attracting smaller investors to test complex strategies. The USDC perpetual futures launched on the same day complement the existing PAXG linear options, forming a stablecoin settlement product suite.
Linear Options with Clear Profit and Loss Calculation
Deribit emphasized that the payout curve of linear options correlates linearly with the underlying price, and the calculation method is identical to that of dollar options offered by traditional brokerages. When the price moves by one dollar, the profit or loss is also calculated at one dollar, making the changes on the balance sheet straightforward and easy to understand, particularly appealing to institutions familiar with Wall Street practices.
Reverse and Linear Dual-Axis Strategies
Currently, Deribit has not abandoned reverse options. The reverse structure uses BTC or ETH as collateral and settlement units, suitable for miners long-term holding native coins or investors unwilling to convert their crypto assets. Linear products cater to funds emphasizing dollar net exposure and need to account quarterly. The unified margin system incorporates both positions within the same risk control engine, allowing for mutual offsets after hedging. This enables capital to flow within the same account, significantly reducing margin rates, allowing investors to deploy complex strategies such as straddles and butterflies with less USDC or BTC.
Incentives for Stablecoin Transition
To encourage the market to transition funds into stablecoins, Deribit offers an annualized USDC collateral reward of approximately 4%. For hedge funds seeking dollar returns, this mechanism is akin to the interest of short-term money market funds, further enhancing the incentive to hold USDC.
Coinbase’s Strategic Puzzle
External observers widely regard this launch as a significant step in Coinbase’s expansion into derivatives. USDC is a collaboration between Coinbase and Circle, long positioned as a key tool bridging fiat currencies and the crypto world. When options and futures are settled in USDC, accounting and tax statements can directly utilize dollar values, simplifying internal control processes and reducing compliance pressures. This aspect is critical for banks and insurance funds that need to explain risk exposures to their boards. If Deribit successfully elevates its dollar stablecoin product line, it could further solidify its market position, having long held the top ranking in Bitcoin options open interest.
