Hi all, happy Tuesday!

If today's tape had a thesis, it's that derivatives are where crypto's volume and narrative now firmly sit. Perp-heavy sectors led the entire board, and HYPE topped both DeFi and Perps in anticipation of Friday's SpaceX listing. The deep dive picks up the same thread from the revenue side: Derive just posted an all-time-high week across options and perps, with HYPE established as one of its biggest markets behind BTC.

Iran fired ballistic missiles at Israel on Sunday night — the first direct strike since the April ceasefire — and Israel retaliated with strikes in western and central Iran. Oil did what it keeps doing this year: it spiked on the headline and quickly gave most of it back. Crude ran higher intraday — Brent toward $97 and WTI above $94 — before fading as both sides signaled restraint, with WTI settling near $91, up less than 1% after having climbed as much as 5.5%. Thus, crude closed roughly inside the low-$90s range it's held for most of May and June, signaling the market either believes the de-escalation pledges or has simply stopped pricing this conflict as a sustained supply shock. Bad-movie-sequel fatigue, priced in.

US markets matched the indifference. The S&P 500 closed flat, and BTC was similarly inert at -0.2%, with the Nasdaq 100 (+0.9%) carrying what modest risk appetite there was. The dispersion within crypto favored two perp-heavy sectors that broke away from the pack.

Perps (+6.5%) and DeFi (+5.9%) topped the cross-sector board, and the driver in both is the same name: HYPE, up 6.48% on the day and a heavyweight in each index. The run lines up with anticipation around Friday's SpaceX listing (Nasdaq: SPCX), priced to value the company near $1.75 trillion in what would be the largest IPO on record. Hyperliquid is hosting a builder-deployed SPCX perp market through its HIP-3 framework, with over $100M in open interest ahead of the debut. The venue is directly capturing pre-IPO positioning, and HYPE is the cleanest liquid expression of that flow.

It wasn't only HYPE inside DeFi, either: MYX on BNB Chain spiked as much as ~16% intraday, and PUMP, which has a new product out, ran ~7%, so the sector's strength was genuinely broad even if HYPE did the index-level heavy lifting.

Crypto Miners (+4.9%) rounded out the leaders. The callback worth flagging is Privacy (+3.8%), the fourth-best sector today after being the single worst on the board last Monday at -4.7%. One green day doesn't reverse the kind of -50% unwind names like Railgun saw off their May highs, but it's a sharp turn after how ugly the sector's week was.

On the downside, RWA (-1.7%), DePIN (-1.6%), and DEXs (-1.2%) were the only meaningfully red sectors. The DEXs/Perps split is the interesting tell — spot DEX tokens lagging while perp venues led the entire board points to where both the volume and the narrative sit right now.

— Macauley

Derive’s Revenue Breakout

When I wrote about Derive in March, the core argument was that the protocol was better positioned than at any point in its history. Options volume was reaching new highs, RFQ activity was breaking out, BTC options share versus Deribit was improving, and HYPE was emerging as proof that Derive could move faster than incumbents on new asset coverage. The open question was whether that momentum would translate into more durable revenue growth.

Last week was the clearest evidence so far that it has.

Derive generated an all-time high of $110K in weekly revenue, net of maker rebates, across options and perps. Options remained the most profitable part of the protocol, reaching an all-time high of $62.5K in weekly revenue while maintaining gross margins above 90%. This continues to support the view that options are Derive’s higher-margin product, even as perps have become increasingly important to the broader exchange.

Perps also had their strongest week on record, generating $47.7K in revenue net of rebates, with gross margin improving to 65% from below 50% recently. Some of that improvement was helped by market conditions. The past three weeks have included roughly $35K in liquidation fees, mostly during downside volatility. That is similar to the liquidation fee contribution seen in late January and early February, though still far below the late October and early November 2025 highs.

The volume side tells a similar story. Derive recorded $702M in notional volume last week, its second-highest weekly total over the past year, behind only the week of March 9, 2026. The important difference is composition. In March, volume was heavily BTC-led, with BTC accounting for more than 70% of total options and perps volume. Last week, BTC accounted for 46%, followed by ETH at 29% and HYPE at 26%.

In this regard, HYPE has become Derive’s most important market after BTC, surpassing ETH in monthly volume in March and accounting for more than 2x ETH volume in May. That said, ETH saw a notable resurgence last week, breaking $200M in weekly volume for the first time in well over a year.

The largest ETH options trade last week was a 5,000-ETH-leg put structure executed via RFQ on June 1, expiring Aug. 28, with ETH trading around $1,967 at execution. The trader paid roughly $312K net for a defined-downside structure targeting ETH below ~$1,775, with a maximum payoff at or below $1,500. 

The relative valuation setup has also improved. Despite DRV trading near all-time highs, its 30-day annualized P/S multiple has compressed from above 50x in early March to roughly 25x today. That compression shows that revenue has accelerated faster than market cap.

There have also been token-level improvements. DRV was listed on Coinbase two weeks ago, improving the asset’s liquidity profile. Derive also completed its B1 token transparency filing in May, further improving disclosure around the token, which remains the only way to gain upside to the protocol’s growth (no dual token-equity structure). 

Finally, Derive’s late-April governance proposal flipped DRV’s net structural flows from negative to positive. The proposal increased the share of protocol fees used for buybacks from 25% to 35%, while reducing staking emissions from 250K DRV to 100K DRV per week. At current prices, that reduces monthly emission-driven sell pressure from roughly $104K to $41K. At the current monthly revenue run rate of about $320K, the old regime would have implied roughly $24K of net negative monthly structural flow, with emissions exceeding buybacks. Under the current regime, buybacks exceed emissions by roughly $71K per month.

Since May, protocol buybacks have fully absorbed emission-driven sell pressure.

The case for onchain options remains clear. As crypto markets mature, demand for more sophisticated hedging and structured positioning should continue to grow, and Derive is increasingly leading that charge.

— Carlos

1. An honest assessment of where crypto price discovery happens

Arrakis published a piece arguing that Hyperliquid is not yet the venue where crypto price discovery happens — at least not for major crypto perps. Using a modified Hayashi-Yoshida lead-lag analysis across 29 perp markets, the author finds that Binance led Hyperliquid in 29/29 assets, Lighter led Hyperliquid in 27/29, and Binance led Lighter in 23/29, with Hyperliquid generally lagging by ~700 ms versus ~100 ms for Lighter. They attribute this mostly to architecture: Hyperliquid’s onchain matching is bound to HyperBFT block finality, so price updates require a maker-taker round trip across two blocks, while Lighter’s offchain sequencer matches in memory and settles later to Ethereum. The conclusion is that Hyperliquid remains the dominant perp DEX by liquidity and innovation, especially in novel markets like weekend RWA trading, but the next battleground in onchain perps will be latency and price discovery, not just volume or open interest. 

2. Ironwood: Verifying the Soundness of Zcash’s Circulating Supply

Zooko Wilcox, Jason McGee, and Taylor Hornby of Shielded Labs published a proposal for “Ironwood,” a Zcash network upgrade designed to restore users’ ability to independently verify the soundness of Zcash’s circulating supply after the recent Orchard counterfeiting vulnerability. The proposal would create a new shielded pool with the bug fixed, while disabling the creation of new outputs in the old Orchard pool, so any remaining Orchard funds could only exit through Zcash’s turnstile accounting mechanism. The key point is that users would not need to trust anyone’s judgment about whether the bug was exploited or wait for everyone to migrate, because once Ironwood activates, they could verify from the consensus rules that excess ZEC cannot continue circulating or escape into other pools. The authors add that migration may also generate evidence about whether the vulnerability was ever exploited but stress that Ironwood’s main purpose is simpler: making Zcash’s supply integrity trustlessly verifiable again.

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