*The program outlined below and all numbers provided are subject to change.

Program Purpose

The purpose of the Program is to support the development of the products listed below by increasing liquidity and volume in the Exchange’s central limit order book and RFQ platform, therefore, benefiting all Participants in the market.

Program Scope

Options, Spot, and Perpetual Futures trading on the Derive Exchange.

Eligibility

The Program is open to any firm or individual completing the application and meeting program requirements. All applicants are subject to review and approval by the Exchange. The program is opt-in so all firms must provide all relevant information to be considered for rewards.

If a participant meets the conditions of different fee tiers through market making, and total trading volume, they will enjoy their highest eligible fee tier. Wash trading is strictly prohibited and will result in disqualification from all reward programs.

Partner Incentives

Market Maker Rewards

• Up to $500,000 USDC per 28-day epoch exchange rebate program

Overview DRV Rewards Pool:

From the epoch roll on June 30th 00:00 UTC -- 1M DRV rewards are distributed to qualifying Market Makers split pro-rata. Scoring, qualification, and payout mechanics follow the existing program.

1. Pool allocations:
   • Options RFQ: 200,000 DRV
   • Options OB: 400,000 DRV
   • Perps: 400,000 DRV
2. Asset-category split - Percentage allocated across the three categories:
   • ETH/BTC/SOL: 50%
   • HYPE 25%
   • Alts, incl. ZEC/XRP/CC/XAUT: 25%
3. Per pool breakdown:

   	Options RFQ	Options OB	Perps
   ETH/BTC/SOL	100,000 DRV	200,000 DRV	200,000 DRV
   HYPE	50,000 DRV	100,000 DRV	100,000 DRV
   Alts, incl. ZEC/XRP/CC/XAUT	50,000 DRV	100,000 DRV	100,000 DRV

Trading Fees

Derive's fee structure consists of:

• A maker/taker fee model
• Fee-based rebate program for market makers and volume program participants

*Derive's matching fees are subject to change.

Overview USDC Rewards Pool:

Market Makers add value to the protocol by lowering the cost to trade. The Derive Exchange pays program participants on their Maker Volume, and offers discounts to high-volume Takers, through a rebate program. Trading rebates are distributed in 28-day epochs and outlined in the table below.

$500,000 USDC rewards pool per 28-day epoch

• Rebate program
• $250K (50%) Options
• $250K (50%) Perpetual Futures (50% to majors, 50% to Alt markets)
• Participants receive discounted fees atomically
• Negative fees are processed at a rebate at the end of each epoch
• New Market Makers eligible to receive introductory top fee tier for first full epoch of quoting
• Fee tier and rebate determined by Market Maker Ranking and Volume Trading rebates are distributed in 28-day epochs and outlined in the table below:

Option Fee Tiers

Perp Fee Tiers

• MM ranking, Volume share, and stDRV holding requirements are by market, i.e. spot, options, perps separately.
• To achieve best fee tiers it requires 1M stDRV per program i.e. 2M required for both options and perps
• Discounts will apply on a percentage basis to fees on spreads and other complex fee logic and calculated pro-rata if $500K rewards is exceeded
• Fees are subject to change
• See fee documentation for more details

Obligations:

The central limit order book will be snapshotted randomly, in 15 minutes windows to evaluate Market Maker performance. Optimizations to be added for supporting desired strike ranges and expiries if deemed necessary after launch. For simplification, the only requirement for MMs is to meet the minimum quote size in order for their quotes to be counted for a given snapshot:

To qualify for rewards, Traders must meet the following requirements:

• Market Maker Program:
  • Min quote size: 500
  • Delta Range: only options with a Delta > 1 and < 98 will be included in the scoring snapshots
  • 28-day Notional Trading Volume > $50M
  • Trading Volume Share > 2%

Additional Incentives:

Increased Rate Limits

Rate limits on matching engine requests are in place as a safeguard for the exchange's order processing capacity. Participants in the Taker Incentive Program are eligible for the highest level of Matching Engine Requests. Initially, there will be two tiers for rate limiting based on Market Maker and Taker status. The exchange reserves the right to add additional rate limit tiers to be assigned based on a combination of Volume Share and Market Maker Rankings.

Advanced Market Maker Protections

Participants in the program may choose to enable the following Market Maker Protections:

• Cancel_On_Disconnect
• Trade_limit - max # of trades per time interval
• Quantity_limit - max # of instruments per time interval
• Delta_limit - max # delta per time interval
• Post_only - order rejects if it would execute on post
• Frozen_time - auto reset of MMPs
• Manual Reset (if desired)

How to participate?

• No commitments required
• Please provide contact information here

Monitoring and Termination of Status

The Exchange reserves the right to remove any Participant from this Program if the Exchange has determined, in good faith, that the Participant consistently and egregiously underperforms the obligations, as determined by the Exchange in its sole discretion. Moreover, the Exchange reserves the right to prohibit the participant and any affiliated entities or individuals from trading, accessing, or participating in any Exchange products and programs for an indefinite period of time, including a prohibition that extends for several years, if the Exchange determines the Participant is found to have engaged in willful misconduct of Exchange Rules.

Market Making Scoring Calculations

Market Makers are scored on:

• Market Coverage
• Market Quality

Market Coverage, Market Quality scores are boosted by:

• Distance from Best Market Multiplier
• Market Scaling Factor

RFQ Scores are boosted by:

• Distance from Max Cost.
• Time Score
• Market Scaling Factors

MM Scores are then weighted by:

• Volume Share

Distance from Best Market Multipliers

• MM’s score for Market Coverage and Market Quality include a series of multipliers based on an order's price distance from best market price
• The further quotes are away from the BBO, the lower the multiplier
• The closer orders are to the BBO, the higher the multiplier
• Low-quality markets have a multiplier of 0

*Weightings and categories are subject to change, see the documentation for the most up to date.

Distance from Max Cost

• MM’s RFQ Score includes a series of multipliers based on an RFQ responses price distance from the maximum cost of the order
• The closer quotes are to the Max Cost, the lower the multiplier
• The more competitive the RFQ responses are, the higher the multiplier
• Low-quality markets have a multiplier of 0

*Weightings and categories are subject to change, see the documentation for the most up to date.

Market Scaling Factor

Each market, set of expiries, or group of strikes can have a unique Market Scaling Factor to encourage liquidity. As markets mature, MSF can be set to 0 and new markets will be incentivized. Initially all market scaling factors will be set to 1.

*Market scaling factors are subject to change, see the documentation for the most up to date.

Option & Perpetual Futures Scoring

Market Coverage

• Time in Market
  • % of the time MMs quotes are on for specified strikes, and expiries. A MM is considered "on" if they are meeting min quoting obligations when the snapshot is taken.
  • √(∑ (# snapshots MM is on for Distance from Best Market Multiplier) / # of snapshots taken) Market Scaling Factor.
  • Let:
    • Db = Distance from Best Market Multiplier on the bid side
    • Da = Distance from Best Market Multiplier on the ask side
    • N = # of snapshots taken
    • n = # of snapshots MM is on for
    • F = Market Scaling Factor

Market Quality

• Book Size
  • Let:
    • Vb = MM quantity bid volume, scaled by its multiplier
    • Va = MM scaled quantity ask volume
    • Ta =Total scaled quantity bid Volume
    • Tb = Total scaled quantity ask Volume
    • Dmax = Maximum Distance from BBO Multiplier (currently 5x)
  • Total MM bid/ask volume relative to exchanges total bid-ask volume taken at each snapshot
  • Sqrt taken to smooth results
  • Scaled volumes = volume scaled by distance from BBO multipliers (I.e. $1000 notional at top of book = $5K)

Trading Volume Multiplier

MMs Score is boosted by % volume traded

Volume Weight = 0

Final Score

Example (Options):

---

RFQ Score

RFQ quoting is scored independently of the order-book Market Coverage and
Market Quality components, and is paid from its own RFQ reward pool. The RFQ
pool is split by asset category, and each category is its own competition,
scored and paid out pro-rata within that category:

A Market Maker's share of a category's RFQ pool equals its RFQ score divided by
the sum of all Market Makers' RFQ scores in that category.

Only filled RFQs are scored. An RFQ that is requested but never filled
contributes nothing to any Market Maker's score. On a filled RFQ, every Market
Maker that submitted a maker quote is scored — not only the one that filled.

What is measured

Each maker quote on a filled RFQ is evaluated on two dimensions — price
competitiveness and responsiveness — and each dimension is then combined
with a per-market weight, the Market Scaling Factor. The three components are
defined below.

1. Distance from Max Cost multiplier

Definition. Max Cost is the worst price the taker is willing to accept on
the RFQ: the maximum total the taker will pay when buying, or the minimum total
the taker will receive when selling. A maker quote's Distance from Max Cost
is the percentage by which the quote improves on that worst-acceptable price:

Distance from Max Cost (%) =  ( MaxCost − QuoteCost ) / MaxCost × 100      (taker buying)
                           =  ( QuoteProceeds − MinProceeds ) / MinProceeds × 100  (taker selling)

A larger positive distance means the maker offered the taker a better price. The
percentage maps to a multiplier as follows:

A quote no better than the taker's worst acceptable price earns 0; the multiplier
rises in steps as the quote becomes more competitive.

Example.

• Taker buying. The taker will pay at most $1,400 for the lot, so
  Max Cost = 1,400. A maker quotes a total cost of $1,386:
  Distance = (1,400 − 1,386) / 1,400 × 100 = 1.0% → falls in the 0%–1% band →
  multiplier = 1. A sharper maker quoting $1,330 gives
  (1,400 − 1,330) / 1,400 × 100 = 5.0% → above 3% → multiplier = 4.
• Taker selling. The taker will accept at least $1,400 in proceeds, so
  Min Proceeds = 1,400. A maker quoting proceeds of $1,430 gives
  (1,430 − 1,400) / 1,400 × 100 = 2.14% → falls in the 1%–3% band →
  multiplier = 2.

2. Time Score

Definition. The Time Score measures how quickly a Market Maker first
engages with an RFQ. It is based on the elapsed time between the moment the RFQ is
created and the Market Maker's first quote on it. Only the first quote counts —
submitting further quotes cannot reset or improve the timer.

3. Market Scaling Factor (F)

Definition. The Market Scaling Factor is the same per-market weight used
throughout the rewards program (see Market Scaling Factor), which lets the
program emphasise some markets and tenors over others. For RFQ scoring, F is the
sum of the scaling factors of the RFQ's individual option legs. Each leg is
weighted by its market and its tenor: a leg expiring in 7 days or less uses that
market's short-dated weight, and a leg expiring in more than 7 days uses its
long-dated weight. Non-option legs (perpetual or spot) carry no RFQ weight.

Current option-market weights. Only markets that list options contribute to
the RFQ score. Their scaling factors are:

Every options market currently carries the same weighting: short-dated legs
(7 days or less to expiry) are weighted 5.0 and longer-dated legs 1.0,
reflecting the program's emphasis on near-term liquidity. Markets that trade only
perpetuals do not list options and therefore contribute no RFQ weight.

The fill boost

Definition. On every filled RFQ, one Market Maker's quote is the one that
transacts with the taker. That Market Maker receives a fill boost of 1.2×.
Every other Market Maker that submitted a quote on the same filled RFQ still
scores, but its contribution is scaled by 0.5×. This rewards winning the
trade while still crediting competitive quotes that did not fill.

Putting it together

For each filled RFQ, and for each Market Maker that quoted it:

1. Take the Market Maker's best Distance-from-Max-Cost multiplier across all
   of its quotes on that RFQ.
2. Take the Market Maker's Time Score from its first quote on that RFQ.
3. Add the two and weight by the Market Scaling Factor F:
   F × (DistanceScore + TimeScore).
4. Apply the fill boost: ×1.2 for the Market Maker that filled the RFQ, ×0.5
   for every other Market Maker that quoted it.

A Market Maker's contributions are summed across every filled RFQ in the epoch.
That single total is then divided by the category's total RFQ fees and
square-rooted (the square root smooths the distribution across Market Makers):

contribution(MM, RFQ) = fillBoost × F × ( DistanceScore + TimeScore )

                       (  Σ  contribution(MM, RFQ)  )
RFQScore(MM) = sqrt    ( ─────────────────────────── )
                       (         TotalRFQFees        )

where the sum Σ runs over all filled RFQs the Market Maker quoted.

Where fillBoost = 1.2 if the Market Maker filled the RFQ, else 0.5. The sum in
the numerator runs over every filled RFQ the Market Maker quoted, and
TotalRFQFees divides that whole sum once (not each term).

Variables

• DistanceScore — Distance-from-Max-Cost multiplier (0 / 1 / 2 / 4) for the
  Market Maker's best quote on the RFQ.
• TimeScore — Time Score (2 / 1 / 0.5) from the Market Maker's first quote.
• F — Market Scaling Factor, summed over the RFQ's option legs. Each leg uses
  the short-dated weight when its expiry is ≤ 7 days, otherwise the long-dated
  weight.
• fillBoost — 1.2 for the filling Market Maker, 0.5 for all other quoters on
  that filled RFQ.
• TotalRFQFees — the normalization denominator: the sum of the taker fees
  paid on every filled RFQ scored in that category over the epoch, across all
  Market Makers (not just the one being scored). It is the same value for every
  Market Maker in the category, so it does not change the ranking within a
  category; it puts each category's scores on a comparable, fee-weighted scale.
  Because it divides the summed contributions, a Market Maker earns more when its
  competitive, well-timed quotes represent a larger share of the fees actually
  transacted in the category.

Example

Alice sends an RFQ to buy 100 ETH weekly call options (expiry < 7 days). Because
the taker is buying, the benchmark is the RFQ's Max Cost — say $1,400
for the lot. The market's short-dated ETH scaling factor is F = 3. Two Market
Makers respond:

ABC submits one quote at t = 200 s for a total cost of $1,386:

• Price improvement = (1,400 − 1,386) / 1,400 = 1% → DistanceScore = 1
• First quote at 200 s (≤ 5 min) → TimeScore = 2
• ABC does not fill → fillBoost = 0.5
• contribution = 0.5 × 3 × (1 + 2) = 4.5

XYZ submits two quotes — $1,360 at t = 500 s, then $1,330 at t = 800 s,
which fills:

• Best price improvement across its quotes = (1,400 − 1,330) / 1,400 = 5% → DistanceScore = 4
• First quote at 500 s (≤ 15 min) → TimeScore = 1
• XYZ fills → fillBoost = 1.2
• contribution = 1.2 × 3 × (4 + 1) = 18.0

Suppose this pool's total RFQ fees for the epoch are $18. Then:

• RFQScore(XYZ) = √(18.0 / 18) = 1.00
• RFQScore(ABC) = √(4.5 / 18) = 0.50

XYZ ranks above ABC: it filled (1.2× vs 0.5×) and offered more price improvement,
even though ABC responded faster.

Notes

• Filled RFQs only. Unfilled RFQs are not scored; quoting competitively
  without ever filling still earns (via the 0.5× quoter boost on RFQs that other
  Market Makers fill), but filling is worth substantially more.
• Self-trades are excluded. A Market Maker's quotes on an RFQ that it itself
  created as the taker are not scored.
• Multi-currency RFQs are split across asset categories in proportion to the
  Market Scaling Factor that each currency's option legs contribute, so a single
  RFQ can feed more than one category pool.
• Anti-spam floor. A per-currency minimum RFQ notional can be applied; any
  currency leg below that floor is dropped from scoring.
• Only option legs are scored for RFQ; perp/spot legs contribute no RFQ score.