Nick Forster, co-founder of onchain options exchange Derive, has proposed minting 500 million new DRV tokens—a 50% increase in total supply—to bolster the project's foundation and secure institutional deals. The governance proposal, published Friday, would allocate the newly issued tokens to the Derive Foundation (formerly Lyra Foundation), with 46% earmarked for core contributors whose allocations have largely vested.
The tokens would vest over four years and could only be sold if DRV's market capitalization exceeds $150 million, well above its current $28.5 million valuation according to CoinGecko data. Forster revealed that Derive has already secured one "major partnership" to bring institutional-grade liquidity and custody services to the protocol, with advanced talks underway with other leading traders and liquidity providers. Industry sources suggest Derive has been in discussions with custodians Fireblocks and Copper.
This move marks a reversal of Derive's earlier pledge not to expand token supply. When the project rebranded from Lyra to Derive, the conversion maintained a flat supply of 1 billion tokens through a 1:1 swap. Forster estimated existing holders would face maximum dilution of 8.25% annually for the next four years.
The proposal comes after Derive abandoned a planned merger with Synthetix in May, which had valued Derive at less than $50 million compared to Synthetix's $1 billion+ valuation. Forster said the team has since cut ties with investors and contributors who supported that deal. Launched in 2021, Derive has processed approximately $300 million in cumulative options volume in 2024 according to Dune Analytics.
A governance vote on the proposal is expected to run for seven days, requiring a quorum threshold of 30 million DRV. If passed, the new issuance would create one of the largest token-funded treasuries in DeFi derivatives.