Nick Forster, the co-founder of the blockchain options exchange Derive, recently proposed a substantial increase in the supply of its altcoin, DRV. The proposal suggests minting 500 million new coins, which would enhance the total supply by 50%. This development could result in an annual dilution of no more than 8.25% for existing investors over four years.
New DRV Coin Supply and Distribution Plan
According to Forster’s proposal, the newly minted 500 million DRV coins are set to be allocated to the Derive Foundation. It is planned to rename the foundation from the former Lyra Foundation to the Derive Foundation. The distribution plan outlines that 46% of the new coins will be allocated to core contributors who have largely completed their vesting periods. These coins will be vested over four years and only released when DRV’s market value exceeds $150 million. Currently, CoinGecko reports the market value of DRV at approximately $28.5 million.
The proposal highlights a lack of token budget within the foundation and its affiliates for financing strategic partnerships. The new supply is deemed necessary for executing agreements to provide institutional-level liquidity and custody, as well as for expanding product diversity.
Forster has disclosed that Derive has reached an agreement with a corporate partner, and discussions with major liquidity providers are in advanced stages. However, the name of the partnered company has not been revealed.
Strategic Shift in Altcoin Direction
The proposal marks a strategic shift from Derive’s previous commitment to refraining from minting new coins. During the transformation from LYRA to DRV coin, the supply remained fixed at 1 billion coins. The new proposal positions the supply expansion as a strategy to enhance competitiveness.
Forster also announced that they have parted ways with team members and investors supporting the merger with Synthetix, which was canceled in May. The merger was mutually terminated due to criticisms from investors about Derive’s undervaluation.
The rationale behind the proposal includes the need to compete with the strengthened market dominance of Deribit after its $2.9 billion acquisition by Coinbase. The distribution model and vesting conditions for the new coins are designed to foster long-term employee commitment and market stability.
