Derive V3 Goes Live, Moving On-chain Options Custody to Ethereum

Derive has launched V3, moving custody of user funds to Ethereum Layer 1 while retiring the protocol’s previous OP Stack-based Derive Chain. The migration is complete and trading has resumed, with existing balances and positions transferred into the new system.

The redesign does not move every part of the exchange on-chain. Order matching remains offchain for speed, while zero-knowledge proofs submitted to Ethereum verify the resulting margin and settlement state.

Ethereum Takes Over Custody and Settlement

Under V3, user funds are held in Ethereum smart contracts rather than on Derive’s own rollup. State data is posted to Celestia, while Ethereum verifies proofs generated from the exchange’s trading and risk calculations.

Derive has also built an escape mechanism that allows withdrawals through Ethereum if the exchange operator stops processing requests. That structure removes Derive Chain from the new architecture as the previous network is wound down.

The change follows Derive’s September proposal to replace its rollup with a zkVM-based architecture settled on Ethereum. User accounts, balances, positions, and rewards were included in the migration.

V3 Expands Margin and Borrowing Options

The upgrade introduces cross-asset margining between ETH and BTC, allowing positions in the two assets to offset some risk within the same margin framework. Borrowing also expands beyond the USDC-only model used previously to include ETH, WBTC and HYPE.

Markets are organized into isolated risk groups, which can limit the effect of problems in one market from spreading across the broader system. Derive is also adding no-code vaults that let builders create strategies and collect fees without developing a separate trading engine.

Derive Targets Easier Options Integrations

Derive CEO and co-founder Nick Forster said ahead of the launch that V3 was designed to make it easier for outside applications to build directly on the exchange.

“We think this is going to be the most integratable exchange and protocol and composable protocol in existence.”

Derive Labs has since described V3 as infrastructure that developers can access through a single API and settlement layer. Builders can use Derive’s underlying options liquidity while keeping their own frontend and user experience.

The platform plans to add more markets, vaults, and integrations over the coming weeks. Derive had processed roughly $14.2 billion in options notional during 2026 through Oct. 1, according to figures cited around the launch.

Migration Leaves Some Orders to Be Recreated

Balances and open positions moved automatically during the V3 cutover, but some order types did not. Traders need to resubmit trigger orders and time-weighted average price orders after the migration. Derive also remains unavailable to U.S. persons. The Ethereum migration changes how the exchange handles custody, settlement and infrastructure, but it does not alter those access restrictions.