From DefiLlama
Jump to navigation Jump to search

The first complete decentralized options protocol built on Ethereum

What is Lyra?

To begin, we should make clear distinctions between the different areas of "Lyra", some of which may confuse new users:

  • The Lyra Protocol: A suite of smart contracts that create an automated market maker for trading options on ERC-20 tokens on the Optimistic Ethereum Blockchain. Learn more about the protocol here.
  • The Lyra Interface: A web interface that allows for easy interaction with the Lyra Protocol. The interface is one of many ways one may interact with the Lyra Protocol. You can access the interface here.
  • Lyra Governance: A governance system for governing the Lyra Protocol, enabled by the LYRA token. Read more about governance

What is the Lyra Protocol?

  • Lyra is an options automated market maker (AMM) that allows traders to buy and sell options on cryptocurrencies against a pool of liquidity. The Lyra protocol has two key user groups, liquidity providers and options traders.
  • Liquidity providers (LPs) deposit sUSD (a stablecoin) into one of the asset-specific Lyra Market Maker Vaults (MMVs). This liquidity is used to make two-sided (buy and sell) options markets for the asset that the vault specifies (e.g. ETH Market Maker Vault LPs quote options on ETH). LPs deposit liquidity to the vault to earn the fees paid when options are traded.
  • Traders use Lyra to trade options. They can either buy options from or sell options to the MMV. Traders pay fees (in the form of the market-making spread) to LPs, as compensation for their liquidity.

Lyra and Synthetix

Lyra uses the Synthetix Protocol in three different ways:

  • As a settlement currency
  • All options are quoted, paid for, and settled with Synthetic USD or sUSD.
  • As collateral for calls


  • All options are quoted, paid for, and settled with Synthetic USD or sUSD.


  • The AMM collateralizes the calls it sells with the relevant synth. For example, when the AMM sells an sETH call it will purchase 1 sETH from Synthetix. On expiry (or when the option is sold) the AMM will sell the sETH for sUSD and allow the option holder to settle.
  • The AMM also collateralizes puts with sUSD.

For delta hedging

  • The protocol aims to keep the exposure of liquidity providers close to delta-neutral. It does this either by longing or short selling the underlying asset on Synthetix. For example, if the AMM is long 500 sETH deltas, it may short sell 500 sETH using Synthetix's short-selling functionality.

LYRA Token Distribution

  • 50% (500,000,000 LYRA) to the community as follows:
  • 15% (150,000,000 LYRA) allocated to Traders. Trading rewards provide a direct incentive to use Lyra and if implemented effectively, can minimise the fees paid by traders as well as the risks incurred by LPs.
  • 15% (150,000,000 LYRA) allocated to Liquidity Providers. Lyra needs liquidity to facilitate options trading. When options are purchased by traders, collateral must be locked to ensure that the option can be paid out if it expires in the money.
  • 10% (100,000,000 LYRA) allocated to Security Module stakers. The Security Module is designed to secure Lyra's traders and liquidity providers in the event that the protocol becomes insolvent and cannot fulfil its obligations. This will become especially important in V2 when positions are not fully collateralised.
  • 5% (50,000,000 LYRA) allocated to incentivise liquidity in the LYRA token, which will help create a healthy market.
  • 3% (30,000,000 LYRA) allocated to Community Incentives. These incentives are as yet unspecified, and are to be allocated by the Council via the LEAP framework.
  • 2% (20,000,000 LYRA) allocated to SNX stakers. Specifically, those who stake SNX on Optimism. This provides a strong incentive for stakers to move over and increase the sUSD supply, which Lyra relies on for trading/LP functionality.
  • 20% (200,000,000 LYRA) allocated to the LyraDAO. The DAO aims to ensure the ongoing development of the Lyra Protocol and the general growth of the Lyra ecosystem.
  • 20% (200,000,000 LYRA) allocated to the core team. This is enough to ensure long-term incentive alignment whilst allowing the community to own the majority of the project. In almost all cases, tokens are locked for six months from the contributors start date and then vest linearly over two years. The vast majority of team tokens (>19%) unlock between January 1 2022 and January 1 2024.
  • 10% (100,000,000 LYRA) were sold to private investors.

Private Investment Disclosures:

  • Pre-seed: In February, 3.4% of the supply was sold at a $15M FDV, implying a token price of $0.015. These tokens were sold from the investor allocation.
  • Seed: In May, 6.6% of the supply was sold at a $50M FDV, implying a token price of $0.05. These tokens were sold from the investor allocation.
  • OTC: In September, 0.5% of the supply was sold at a $100M FDV, implying a token price of $0.10. These tokens were sold from the DAO allocation.
  • All private investor tokens are locked until January 1 2022 and then vest linearly over two years, with the final tokens unlocking on January 1 2024.

Lyra Council

  • The Lyra Council is a five-seat representative council elected by the LYRA token holders. This council has the mandate to administer the LEAP framework, which seeks to ensure that changes to the protocol are transparent and well-governed. The Lyra Council sits for four calendar months, after which a new Council is elected.