Interest in Ether Derivatives Surges Ahead of Merge

Daily volumes, open interest for CME Group’s ether futures contracts up this month before Ethereum’s move to proof-of-stake

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key takeaways

  • Average daily volume for CME Group’s ether futures contracts in September is up 15% from August
  • A record 288,000 crypto futures contracts traded on Coinbase’s platform on Sept. 9

Demand for ether futures contracts and other crypto derivatives is surging just days before the Merge — the Ethereum blockchain’s pivot from proof-of-work to a proof-of-stake-powered consensus mechanism.

CME Group’s ether futures contracts have seen rising average daily volume and open interest so far this month, while Coinbase is reporting crypto derivatives volume records after its launch of nano ether futures.

Throughout September, CME Group’s ether futures contracts have notched average daily volume (ADV) of 7,100 contracts, the company told Blockworks Monday — up 15% from August. Average daily open interest (ADOI) for the contracts stands at 4,400, a 10% increase from last month.

The number of large open interest holders — defined as market participants holding 25 or more contracts — reached all-time highs for ether futures and micro ether futures last week, with 62 and 139 such holders, respectively, a company spokesperson told Blockworks.

Despite climbing demand for ether futures, ADV and ADOI for CME Group’s micro ether futures contracts — sized at 0.1 ETH ($160) — were down 12% and 9% in September, respectively, when compared to August.

Though ADV for the derivatives marketplace’s micro ether options was 2,100 contracts — a 59% reduction from August — ADOI for the product was roughly 112,000, up 43% month over month.

CME Group’s micro ether options had an ADV of roughly 5,260 contracts in August, up more than 130% from July. Open interest in those products averaged a record of 75,959 contracts — up about 135% from the month prior — reaching an all-time high of 124,814 contracts on August 30.

The company launched options on ether futures Monday. The new contracts — based on the CME CF Ether-Dollar Reference Rate — deliver 1 ETH ($1,600) futures, sized at 50 ETH ($80,000) per contract. 

Tim McCourt, the company’s global head of equity and foreign exchange products, said the new offerings would complement CME Group’s ether futures — first offered in February 2021 — that have seen a 43% increase in average daily volume year over year.

“The launch of our new ether options contracts is particularly well-timed to provide the crypto community with another important tool to gain access to and manage exposure to ether,” he said in a statement.

Coinbase derivatives already a success

Coinbase’s derivatives exchange had a record volume day on Sept. 9, just weeks after launching its nano ether futures contracts. 

Sized at one-tenth of an ether, the contracts were introduced on Aug. 29. The launch followed Coinbase making available nano bitcoin futures contracts — sized at 0.01 BTC ($205) — in late June. 

A combined 288,000 crypto futures contracts — 178,000 BTC contracts and 110,000 ETH contracts — traded on its platform last Friday, according to Coinbase, marking an all-time high. 

More than 200,000 nano bitcoin futures and 85,000 nano ether futures contracts had traded on Tuesday, as of noon ET, a company spokesperson told Blockworks.

The nano ether futures are available through retail brokers EdgeClear, Ironbeam, NinjaTrader, Optimus Futures, Stage 5 and Tradovate, as well as several clearing firms. Coinbase is awaiting approval to offer futures directly to clients.

Industry watchers told Blockworks that sustainability-minded institutions — such as such as pension funds and insurance companies — are likely to gravitate toward ether going forward, as the blockchain’s energy consumption is expected to decrease by about 99.9% after the Merge.

Ben Dean, director of digital assets at WisdomTree in Europe, said at the time that the blockchain’s transition to proof-of-stake “completely changes the investment case” for the asset.


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