How Conduit Powers Derive: Ethereum’s Premier Derivatives DEX

Derive is one of the biggest DEXs for derivatives trading in the Ethereum ecosystem. From October 2024 through January 2025, Derive has seen remarkable growth, going from $107 million in monthly trading volume to $3.7 billion in one year. During that time, Derive’s TVL, monthly active users, and of course, trading fee revenue have also grown exponentially.

Source: Derive

Derive achieves all this with a dedicated rollup, powered by Conduit. In this case study, we’ll tell you how Conduit helps Derive operate Ethereum’s biggest derivatives DEX, including:

• Helping Derive build the perfect DEX rollup and launch with ease
• Making Derive profitable by cutting data availability (DA) costs 95% in two weeks with a switch to Celestia
• Giving Derive users a CEX-like decentralized trading experience with Conduit Bundler

Keep reading to learn how Conduit acts as a trusted partner to Derive, helping its rollup achieve DEX excellence.

The Derive rollup tech stack

Rollup framework: OP Stack

Settlement layer: Ethereum

Data availability: Celestia

Derive’s Conduit Marketplace integrations

Account abstraction: Conduit Bundler

Easy with Conduit: Launching Derive’s high-performance DEX rollup 

Derive began with the purpose of bringing derivatives – one of the world’s most widely used financial instruments – onchain. “Uniswap revolutionized everything for spot exchanges,” said Derive Head of Engineering Josh Kim. “But derivatives do orders of magnitude more volume than spot. So the question was, what's the equivalent for derivatives? How do we foster liquidity onchain and reduce the risk traders incur?” 

Derive initially built its DEX as a protocol on OP Mainnet, powered by an AMM. But the team soon decided to switch to an orderbook, with all risk assessment and trade settlement occurring onchain. This drastically increased Derive’s gas usage needs. “An ordinary swap on Uniswap is about 100,000 gas. But a risk check on Derive can add between 1 million and 60 million gas depending on the number of positions the trader holds – it’s very mathematically intensive,” said Kim. “It wasn’t even really a question of expense. It would’ve been impossible to get the throughput we needed if Derive ran as a protocol on another chain.” 

That’s when Derive decided to deploy its own rollup. The team wanted to stay in the Optimism ecosystem and use the OP Stack, and quickly identified Conduit as the platform to handle the rollup side of things, so they could focus on the DEX. “We were already doing backend, frontend, smart contracts, mechanism design, and sales. We would’ve had to hire another two to three people to run the rollup – it’s not something we wanted to do,” said Kim. “Launching with Conduit was totally painless.” 

How Conduit scales Derive: Cutting DA costs 95% and raising gas limit 13x to empower traders

From the beginning of the partnership, Conduit worked to make key rollup infrastructure that would let Derive scale with growth. 

One early example: Implementing the Geth upgrade on Derive’s RPC nodes to raise its gas limit from 30 Mgas/s to 400 Mgas/s. “If we were running our own rollup, that would have been a long manual process. But Conduit did it quickly,” said Kim. “It’s a great example of how Conduit makes it easy for us to stay on the bleeding edge.” 

Upgrades like that have enabled Derive to reach highs of nearly 80 Mgas/s during times of high activity, without degradation in RPC performance or user experience.

High gas throughput is crucial to the Derive product. The gas limit increase Conduit implemented allowed Derive to double the number of maximum positions traders could take from 64 to 128. “2x may not sound like much but it enables market makers to be many multiples more capital efficient because of the way portfolio margin works. That brings more market makers to our platform, which means the spreads can get tighter and tighter for users,” said Kim.

Another crucial scaling initiative: Moving Derive from Ethereum to Celestia for DA. Derive processes huge amounts of data onchain, and DA costs were out of control on Ethereum. “At this rate, we were going to run out of money,” said Kim. “Conduit moved us to Celestia in under two weeks, it was totally painless.”

The chart below shows what an impact the DA switch had on Derive’s bottom line.

Derive’s DA costs dropped from a daily average of 1.3 ETH to 0.06 ETH immediately following the implementation of Celestia – a 95% drop, all without the Derive team having to lift a finger.

Derive has also benefited from Conduit’s native apps. For instance, Derive uses Conduit Bundler – a part of the Conduit Account Abstraction package – to streamline the trader experience. “We want Derive’s UX to feel as smooth as a CEX,” said Kim. “So we don’t want users having to sign each individual transaction when they trade. Conduit Bundler takes care of that.” While Derive previously utilized a bundler from another provider, switching to Conduit Bundler allows Derive to keep more of its infrastructure on one central platform, cutting down on operational overhead. 

What’s next for Derive?

Derive is taking the lead on DeFAI, recently announcing plans for AI-powered trading partners on Derive Pro. According to Kim, the AI initiative will make derivatives more accessible to users, allowing non-experts to trade options like experts. 

Derive’s AI products, along with other initiatives in the works and the platform’s continued growth, will likely raise more infrastructure needs in the future. But Conduit is prepared to help Derive manage those needs, and ensure that all infrastructure upgrades serve to make Derive the best possible derivatives DEX for its users.

“Most teams don’t have the expertise to run their own rollup, so they need to be able to trust their rollup platform,” said Kim. “That’s what we have with Conduit. It’s a team of experts we can always rely on.”

Schedule a Conduit demo and learn how we can help your DEX win on its own dedicated rollup.