How Could Options or Derivatives Contracts Be Designed to Only Be Settled between Holders of Valid DIDs?

This could be achieved at the smart contract level. The derivative contract's code would include a function that, before executing a trade or settlement, calls an external registry contract to verify the DIDs of both counterparties.

This registry would hold attestations or pointers to verifiable credentials. The core logic would contain a require statement, ensuring that the settle() or transfer() function only proceeds if both addresses involved are associated with a valid and current DID credential.

This effectively creates a permissioned environment on an otherwise permissionless blockchain.