On-chain options are still at a very early stage compared with the market that perpetual futures have already built. OAK Research estimated in March 2026 that on-chain options volume amounted to just 0.2% of on-chain perpetual futures volume, leaving a large gap between today’s decentralized options market and the more established centralized venues.
For Bitcoin holders trying to reduce downside risk, the usual choices are to sell the asset or short perpetual futures. Both come with trade-offs. Selling cuts spot exposure, while shorting perpetuals introduces funding costs and liquidation risk. On-chain options offer a different route: pay a fixed premium, keep holding Bitcoin, and transfer crash risk to a counterparty willing to price it.
The article, written by Gino Matos and translated by Saoirse for Foresight News, argues that crypto has already built mature markets for holding assets and taking leveraged directional bets, but markets for managing portfolio risk have lagged behind. Options sit in that gap. They allow traders to choose which risks to keep and which risks to hand off.
That covers several use cases. Long-term holders can buy puts to protect against a sharp drawdown without selling their assets. Funds can buy calls to cap the maximum loss on new long exposure. Traders can buy straddles to trade volatility itself. Asset-management treasuries holding long-dormant positions can sell covered calls to earn income. In that framework, options turn binary risk into a standardized instrument with pricing, expiry and a counterparty on the other side.
How a mature options market can bring in new capital
Without a developed options market, investors looking to cut risk usually have two choices: sell spot or short perpetuals. One sends capital out of the market. The other adds leverage and raises the chance of liquidation. Buying a put changes that structure. Investors can stay long the asset and pay someone else to take part of the downside.
That matters for market composition. Even during a pullback, capital can remain in the market because investors keep their spot exposure while reallocating downside risk to other participants.
Options market makers hedge their directional exposure by trading the underlying asset or related futures as prices move. Because of that, options liquidity is tied directly to spot and perpetual futures liquidity. If hedging costs fall, market makers can quote tighter spreads. Tighter spreads can draw more volume, and that in turn feeds more hedging flow back into spot and perpetual markets.
The article also says options can pull in a wider mix of capital than spot or perpetuals alone. Spot activity depends on investors willing to hold coins. Perpetual trading often depends on one-sided directional views. Options can attract volatility funds, market-neutral teams, insurance players, premium sellers, arbitrage desks and structured-product issuers when volatility is mispriced, hedging is expensive or event risk becomes tradable. Those opportunities can still exist in flat or falling markets.
On-chain options can also price uncertainty across different strikes and expiries. That gives the market a way to show how much investors are willing to pay for protection, where upside demand is concentrated and when large moves are expected. In that sense, the piece argues, options can work as a forward-looking gauge of uncertainty rather than a simple snapshot of the current asset price.
Why on-chain options need the infrastructure built by perpetuals
DeFiLlama’s 2025 DeFi industry report, cited in the article, shows weekly DeFi perpetual futures volume reached $250 billion to $300 billion in 2025, far above the roughly $50 billion seen in 2024. Open interest nearly tripled, approaching $90 billion. The article says a new generation of perpetual platforms has already built exchange-grade matching systems, deep order books, unified collateral models and institutional-grade risk controls on-chain. Those same building blocks are likely to support options.
When traders buy options, market makers usually hedge by trading the underlying asset or perpetual futures as prices move. Research on market structure, as cited in the piece, indicates that options bid-ask spreads depend directly on how easily market makers can hedge in the underlying market. Perpetuals can serve as that hedge vehicle, which makes on-chain options more practical to run at scale.
In centralized markets, Deribit remains the dominant venue. Using Coinbase data, the article says Deribit accounts for 85% of the Bitcoin and Ether options market. It also says Coinbase completed its acquisition of Deribit in August of the same year. Deribit’s options volume over the past 24 hours stood at $2.5 billion, with open interest at $27.3 billion.
The on-chain market is much smaller. DeFiLlama’s options dashboard, as cited in the article, shows Derive’s open interest has passed $1.2 billion. In March 2026, on-chain options premium volume reached a record above $51 million. That still looks tiny next to average daily on-chain perpetual futures volume of about $21.4 billion. OAK Research’s estimate for the same period put options volume at only 0.2% of perpetuals volume.
What broader on-chain options adoption could change
The article points to several direct use cases. Protective puts could let long-term holders stay in the market during sharp declines while defining their maximum downside in advance. Covered-call vaults could help holders generate yield on long-term assets. Cash-secured puts could allow treasuries to earn income while positioning to buy assets at lower target prices if the market falls.
If those tools mature, liquidation would no longer be the only way DeFi deals with downside risk. Investors could set explicit protection with options before a position reaches a margin call.
A 2026 paper on on-chain options cited in the article argues that automated market makers changed decentralized spot trading, but options still lack a mature universal standard. The paper says robust options infrastructure requires high-frequency price oracles and stable liquidation engines, components that most blockchains still do not have.
A recent Block Scholes report on on-chain options reaches a similar conclusion on the industry’s early struggles. It points to thin liquidity, difficult hedging, weak market-maker participation and poor user experience. The report also says newer infrastructure, including central limit order books and request-for-quote systems, is helping market makers quote more consistently across strikes and expiries.
The article suggests a more realistic growth path may come from pooling structures and structured products that hide the complexity of the underlying mechanics. That could include Bitcoin positions with downside protection, fixed-income notes and embedded insurance tools, leaving ordinary users free from having to price complex options themselves.
Still, market-maker hedging does not only reduce volatility. It can amplify it. If a large share of traders crowd into the same strike and market makers are left with negative gamma exposure, those firms may need to sell as prices fall and buy as prices rise, reinforcing the move already under way.
The hurdles that still stand in the way of scale
The article closes by laying out two possible paths.
In the optimistic case, perpetuals liquidity keeps improving, portfolio margin systems mature and market-maker participation rises. That would allow tighter option pricing across a broader range of strikes and expiries. Funds, treasuries and hedging desks could then use on-chain options more widely, much as traders use Deribit today. During violent swings, investors could keep their asset exposure while passing downside risk to others. DeFi, in that scenario, would gain native hedging tools, volatility products and insurance-style derivatives that let users manage risk without selling the underlying asset.
In the pessimistic case, options remain too complex, spreads stay wide and liquidity never concentrates. Markets for different strikes and expiries remain fragmented across blockchains and trading venues. With limited ways to hedge, market makers keep quoting conservatively. Under that outcome, on-chain options remain a niche tool for specialist trading firms, while most users continue to manage risk through perpetuals or by selling spot when volatility spikes.
The piece ends with a simple contrast: perpetuals brought leveraged crypto trading on-chain, while options could do the same for the transfer of risk itself.