Options Automated market maker Lyra deploys to Arbitrum Network

After successfully launching Lyra’s automated market maker, Lyra is now a multichain protocol. Newport upgraded earlier in the week

Lyra was initially only available on Ethereum layer 2 chain Optimism. Since then, Lyra has grown to Arbitrum, an additional layer 2 platform. It is also integrated with decentralized exchange GMX perpetuals, a derivative trading product that doesn’t have an expiration date.

“Paul,” a key contributor to Lyra, said to CoinDesk that “One of our main drivers for launching on Arbitrum or GMX was that we noticed distinct communities forming on each of the chains. There are users who only use Arbitrum, and others who only use Optimism. It didn’t make sense to limit ourselves to a subset of users.

Prior to the upgrade, Lyra’s market maker vaults paid swapping fees for every collateralization or hedging trade. Lyra’s MMVs would pay a fee if a trader purchases a call option contract for ether (ETH). Lyra’s MMVs will sell the collateral ETH back to the trader once the position is closed.

The process was slow and Lyra’s liquidity providers had reduced the yields on the swapping fees.

Lyra’s MMVs no longer need to be swapped for ETH in order to hedge or collateralize every trader who buys an option contract. Options are now partially collateralized with cash while Lyra uses GMX perpetuals to hedge its exposures.

The Newport upgrade resulted in the Lyra account being added to Twitter Clearly indicated Swapping fees should be decreased and cost savings passed onto [liquidity providers] In the form of a higher yield for the same trading volume.”

Total notional trading volume Lyra crossed $1 billion for the first-time on Jan. 16th, and Lyra’s trading volume has increased 8.4% in the last 30 days.

By David Warsh

David Warsh is a leading expert in the field of cryptocurrency and blockchain technology. With over a decade of experience in the industry, he has a deep understanding of the intricacies of digital currencies and the potential they hold for revolutionizing various industries.