Options Automated Market Maker Lyra Deploys to Arbitrum Network

Lyra, an automatic market maker for crypto merchants to purchase and promote choices, is now a multichain protocol after efficiently launching its Newport improve earlier this week.

Initially solely working on Ethereum layer-2 chain Optimism, Lyra has expanded to Arbitrum, one other layer-2 platform, and built-in with decentralized alternate GMX perpetuals, a spinoff buying and selling product with out an expiration date.

“Paul,” a core contributor for Lyra, instructed CoinDesk, “One in every of our principal drivers of launching on Arbitrum and GMX is that we observed that there have been distinct communities forming on every chain. There are customers that solely use Arbitrum and customers that solely use Optimism. We realized it doesn’t actually make sense to simply wall ourselves off to just one subset of customers.”

Earlier than the improve, Lyra’s market maker vaults (MMVs) paid swapping charges for each collateralization and hedging commerce. For instance, when a dealer buys a name possibility contract on ether (ETH), Lyra’s MMVs would buy ether from a spot alternate, incurring a price; as soon as the dealer’s place has closed, Lyra’s MMVs would promote again the ETH used for collateral, incurring yet one more price.

Because of this, the method was inefficient, and liquidity suppliers in Lyra’s MMVs had lowered yields from the swapping charges.

Now, Lyra’s MMVs don’t have to swap the bottom asset like ETH to collateralize or hedge each time a dealer buys an possibility contract. As an alternative, choices are actually partially collateralized in money, whereas Lyra hedges its exposures through the use of GMX perpetuals as a supply of liquidity.

Because of the Newport improve, the Lyra Twitter account indicated that swapping charges “needs to be lowered with price financial savings handed onto [liquidity providers] within the type of increased yield from the identical quantity of buying and selling quantity.”

Whole notional buying and selling quantity on Lyra handed $1 billion for the primary time on Jan. 16, and previously 30 days, Lyra’s buying and selling quantity elevated 8.4%.