Synthetix Has Planned to Acquire Derive, a Decentralized Options Platform

The proposal, formalized as SIP-415, details a strategic vision for rolling up both platforms into a single derivatives protocol that executes on top of the Ethereum mainnet.

Synthetix, the decentralized derivatives protocol running on the Ethereum mainnet, has announced a proposal to acquire Derive, a decentralized options and perps exchange.

The proposal, formalized as SIP-415, aims to roll up both platforms into a single derivatives protocol that executes on top of the Ethereum mainnet. The move would bring together product development, engineering talent, and token economics in a bold bid for unified growth on Ethereum’s layer 1.

Derive, a well-known contributor to the Synthetix ecosystem, is a decentralized exchange focused on options and advanced derivatives. It is powered by a modular architecture that enables the rapid integration of new products and features. Derive’s application-chain stack is currently in a production-ready state, and its sleek user interface is a testament to the seamless user experiences it prioritizes.

Token Exchange Deal at $27M

The deal, which is still subject to the approval of the council and the governance community of Derive, would take place with the help of a token exchange mechanism. According to the terms proposed, Derive token holders would be entitled to SNX tokens in the ratio of 27 DRVs to 1 SNX, putting the market value of the transaction at about $27 million USD.

To make this transaction possible, Synthetix intends to release up to 29.3 million SNX tokens. These tokens will be on a 3-month lock-up period, after which they will be on a 9-month linear vesting schedule. If given the green light, the deal would practically combine the supply of Derive tokens and market capitalization under SNX, forming a single economic configuration.

Strategic Alignment and Technological Integration

The proposed acquisition is likely to be a spur for Synthetix’s dreams of being the major perpetuals engine on mainnet Ethereum. Derive’s CLOB-based perpetuals exchange and advanced options infrastructure would provide more functions to the protocol so that they can directly compete with other big players like Hyperliquid, Binance, Deribit, and dYdX.

Usefully, the Derive team consists of several developers and architects who have experience with Synthetix. Their level of expertise in the modular CLOB design, Layer 1 and 2 architecture, and on-chain options mechanics is seen as a smooth continuation for the current trajectory of the Synthetix protocol.

Since Derive’s app-chain stack is already in a production-ready state, the deployment of the new exchange on the Ethereum mainnet could start just immediately after the deal is closed.

Synthetix also believes that this merger is set to simplify governance. By integrating both communities onto a single token and a decision-making mechanism, the protocol expects greater network effects, less friction when it comes to governance coordination, and more of a straight line towards the market.

A Return to the Founding Principles of Synthetix

The Synthetix leadership has positioned the acquisition as a reaffirmation of the protocol’s founding principles, that is, vertical integration, token-aligned incentives, and ownership of key infrastructure. We want to build a complete on-chain derivatives ecosystem from options and perpetuals to vaults and app-chains that are native and deployed with urgency.

Ben “Fenway” Celermajer put emphasis on the strategic importance of re-focusing on the Ethereum mainnet. By going back to its reliable neutrality, composable settlements, and trusted self-custody on Ethereum, Synthetix’s redemption path is slated to become a market-leading decentralized derivatives platform again, he said.

What Comes Next

The acquisition is still pending approval from the governance. The Spartan Council will deliberate through the Synthetix Improvement Proposal (SIP) process, while Derive token holders will vote via a Derive Improvement Proposal (DIP).

If approved, Derive’s treasury, intellectual property, code repositories, user interface stack, and governance system will be defined by the Synthetix protocol. SNX tokens will be distributed to DRV holders at agreed vesting terms, bringing in long-term incentives for the unified ecosystem.

This team-up, if successful, would not only streamline the token structure and development roadmap of Synthetix but also have the potential to make it a dominating force in the decentralized derivatives market on the Ethereum mainnet.