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Lyra Finance is a decentralized options trading platform built on Optimism. Due to the low transaction fees, it brings options trading closer to users that may be priced out of Ethereum or simply don’t want to pay high fees on mainnet.
Lyra Finance uses LYRA as the native token which gives governance rights to holders as well as revenue share which is distributed to LYRA stakers. Staking is currently available on Ethereum mainnet and all information regarding the token can be found here.
To provide users with constant and reliable liquidity Lyra Finance has created liquidity pools which are used by options traders. Currently the platform supports Ethereum, Solana, Chainlink and Bitcoin trading and all of the liquidity is provided by the pools in which these assets are paired with sUSD.
Pricing for options is dynamic and is determined by three key factors: Time, Price and Implied Volatility.
Time takes into consideration the duration of the options contract you are trying to purchase. The more time there is for the asset to move in price the more expensive your contract becomes.
Price refers to the current market price of a specific asset which is provided by the oracle.
Implied Volatility or IV is determined by past price movements and the expected volatility of a specific asset. The more price fluctuated during the past few days or weeks the higher the IV index becomes. More on this subject can be found here.
Lyra Finance is an options trading platform but it also gives liquidity providers and token stakers a way to earn passive income. If you provide liquidity on Lyra, you will be rewarded with Lyra tokens as well as the fees your pool generates.
Another way to earn is to stake security assets such as USDC and LYRA. The protocol only uses these in the case of a shortfall event and rewards stakers with dynamic yield.
This diversified liquidity model helps Lyra Finance to be more stable than many other decentralized options trading platforms. More information regarding the security model can be found on the official FAQ page.
Optimism is a growing ecosystem with very few dapps running on it right now but Lyra Finance could be a reason to bridge some Ethereum over and start using the network.
Navigating the platform and trading options is as easy as it gets and requires no other market participant since buying and selling options is done directly in the poos. If you want to exit a position you can do it instantly without the need to find a buyer for your contract.
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