[DIP] Revitalize Derive

DIP
1

Simple Summary
Revitalize Derive by rewarding key stakeholders accordingly.

Abstract
This proposal presents a strategic alternative to external acquisition by equipping Derive with the tools to scale independently. It introduces a one-time increase in token supply, allocated through performance-aligned mechanisms designed to properly compensate contributors, attract liquidity, and preserve DAO ownership. Specifically, 400M $DRV will be allocated as out-of-the-money (OTM) options for contributors, while 100M $DRV and temporary revenue-sharing terms will be allocated to high-performing market makers. The aim is to empower Derive’s two most critical stakeholders (builders and liquidity providers) while maintaining full DAO control, minimizing dilution, and aligning incentives with long-term platform success.

Motivation
Over the past 4+ years, Derive has built a powerful product stack: performant options and perps infrastructure, custom chain architecture, and a growing ecosystem of users and market makers. But to reach the next level (greater liquidity, deeper markets, and faster execution) Derive needs a final strategic push.

This proposal achieves that by focusing incentives where they matter most:

  1. Contributors: who have delivered excellence despite limited resources and deserve full upside exposure aligned with long-term success.
  2. Liquidity Providers: who enable the product to scale and compete with alternatives on execution and market quality.

Importantly, this proposal offers a significantly less dilutive and more empowering path forward compared to the alternative acquisition proposal:

  • Under Synthetix’s terms, $DRV holders would end up with <6% of $SNX’s future supply.
  • In contrast, this plan requires only a 50% increase in total DRV supply, with all new issuance being performance-based and community-governed.
  • It also preserves Derive’s independence, product vision, and roadmap.

If additional treasury resources are needed down the line, a DAO-led raise can be conducted at a fair valuation, equal to or better than the one currently offered by external acquirers.

Specification

Token Supply Adjustment

  • New Total Supply: Increase from 1,000,000,000 $DRV → 1,500,000,000 $DRV.
  • Purpose: Provide strategic upside exposure to the platform’s core stakeholders.

Contributor Incentives

  • Allocation: 400,000,000 $DRV in OTM options.
  • Strike Prices:
    • 100M at $0.10
    • 100M at $0.25
    • 100M at $0.50
    • 100M at $1.00
  • Vesting: 12 month vesting, options expiring after 5 years.
  • Eligibility: Allocated to existing and future contributors.
  • Rationale: Rewards long-term builders without immediate circulating supply impact, aligns incentives with protocol success.

Liquidity Program

  • Allocation: 100,000,000 $DRV for market makers.
  • Terms:
    • Must commit to providing competitive spreads and deep liquidity across key pairs.
    • Benchmarked against execution quality from top venues (e.g., competition platforms).
    • Tokens distributed based on onchain metrics: volume, spread quality, uptime, etc.
  • Vesting: Linear over 12–18 months.

Revenue Sharing

  • Mechanism: Temporary revenue share agreements with market makers for a % of Derive’s protocol revenue.
  • Duration: Short-to-mid term (e.g. 12–36 months), adjustable via governance.
  • Purpose: Provide immediate economic incentive while long-term upside is captured through token allocations.
  • Transition Path: Once performance is proven, shift away from revenue share.

Dilution Control & DAO Oversight

  • Total Dilution: Capped at 50% increase (new supply is 500M $DRV).
  • No immediate circulating supply impact: All tokens are locked or vested over time.
  • Governance Control: All allocations to be transparent and executed via DAO-approved frameworks.
  • Flexibility: Token strike levels, vesting schedules, and recipient criteria open for community feedback and fine-tuning.

Product and Governance Independence

  • No change to Derive branding, stack, roadmap, or governance.
  • This proposal reinforces Derive’s autonomy and rewards the community that built it.
  • Contributors and DRV holders retain full exposure to future upside.

Treasury Path Forward

  • Should additional funding be needed, the DAO retains the option to raise at a valuation equal or higher than Synthetix’s offer, without giving up control or excess dilution.
  • No treasury assets or control are transferred as part of this proposal.
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