Options Automated Market Maker Lyra Deploys to Arbitrum Network

With the Newport upgrade, Lyra is likewise now integrated with GMX perpetuals, allowing users to take advantage of improved financial resources efficiency and user experience.

Lyra, an automated market maker for cryptocurrency traders to buy and sell options, is now a multichain protocol after successfully launching its Newport upgrade earlier this week.

At the beginning only running on Ethereum (ETH) layer-2 chain Optimism, Lyra has expanded to Arbitrum, another layer-2 platform, and integrated with decentralized exchange GMX perpetuals, a derivative trading product without an expiration date.

“Paul,” a core contributor for Lyra, informed CoinDesk, “ 1 of our main drivers of launching on Arbitrum and GMX is the fact that we noticed that there were distinct communities forming on each chain. There are users that only use Arbitrum and users that only use Optimism. We discovered it doesn’t really make sense to just wall ourselves off to only one subset of users.”

Before the upgrade, Lyra’s market maker vaults (MMVs) paid swapping charges for every collateralization and hedging trade. For instance, when a trader buys a call option contract on ether (ETH), Lyra’s MMVs would buy ether from a spot exchange, incurring a fee; once the trader’s position has closed, Lyra’s MMVs would sell back the Ethereum (ETH) used for collateral, incurring is still another fee.

In doing so, the procedure was inefficient, and liquidity providers in Lyra’s MMVs had lowered yields from the swapping fees.

Now, Lyra’s MMVs do not must swap the base investment like Ethereum (ETH) to collateralize or hedge each time a trader buys an option contract. Instead, options are now partially collateralized in cash, while Lyra hedges its exposures by using GMX perpetuals as a source of liquidity.

Because of  the Newport upgrade, the Lyra Twitter account indicated that swapping charges “should be reduced with cost savings passed onto [liquidity providers] in the form of higher yield from the same amount of trading volume.”

Total notional trading volume on Lyra passed $1 Billion for the 1st time on Jan. 16, and in the past 30 days, Lyra’s volume of trading increased 8.4%.

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