# What is Derivatives Yield?

By [3Jane ](https://paragraph.com/@3jane) · 2024-05-08

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In our whitepaper [“3Jane Protocol: Unlocking Crypto-Native Derivatives Yield”](https://www.3jane.xyz/whitepaper), we coin a term called “Derivatives Yield”. What exactly does this term mean?

Loosely, it means any _income-like yield_ earned from trading derivatives such as perpetuals and options. In crypto, this yield will mainly come from two places:

1.  **cash & carry yield** (perpetuals). This is Ethena.
    
2.  **options premiums yield** (options). This is 3Jane.
    

![Derivatives Yield Types](https://storage.googleapis.com/papyrus_images/984a344bac05282065eeed9a2a46d85dd74095aa6b4c0f4879e51ff65fa8d88a.png)

Derivatives Yield Types

E**thena: Cash & Carry Derivatives Yield**
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Ethena sUSDe is just a construction of two positions:

1.  long stETH spot
    
2.  short ETH **perpetuals** on an exchange (collateralized by stETH)
    

By doing this, Ethena is effectively an onchain delta-neutral vehicle for farming derivatives yield — particularly the _funding rate_ from exchanges.

**3Jane: Options Premiums Derivatives Yield**
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3Jane eETH-C is just a construction of two positions:

1.  long eETH spot
    
2.  short ETH deep out-of-the-money **options**\* on 3Jane (collateralized by eETH)
    

By doing this, 3Jane is effectively an onchain vehicle for farming derivatives yield — particularly the _options premiums yield_ over-the-counter.

Mainnet coming soon.

Follow the 3Jane protocol [twitter](https://twitter.com/3janexyz) and join the [telegram](https://t.me/three_jane)!

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_3Jane will_ **_not_** _be offered to persons or entities who are U.S. Persons, Restricted Persons, or Sanctioned Persons. Access and use by such persons is expressly prohibited._

**\*Options** are a type of derivative that grants options buyers access to leverage in crypto without getting liquidated, unlike perpetuals. However, just like perps traders must pay a _funding rate_ to be able to trade on leverage, options buyers must pay something equivalent to options sellers called a _premium_ to get access to leverage. As a result, selling options is commonly used as a way to earn yield by collecting _premiums_ in exchange for taking on a short volatility position. Options are a multi-trillion dollar market in traditional finance. Selling options is **not** a risk-free strategy. Read more [here](https://workplace.schwab.com/content/options-strategies-covered-calls-covered-puts).

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*Originally published on [3Jane ](https://paragraph.com/@3jane/what-is-derivatives-yield)*