Lyra Finance | Crypto Options Trading Protocol Review
Money flowing into the market, crypto being the cool kid around the block again, and everybody looking at how to make a quick buck. From scalping, swing trading, staking, and lending, now we have options trading.
In my journey to discover new emerging platforms and be quick at catching new waves, I found Lyra Finance.
Lyra is an automated market maker (AMM) for buying and selling options on the Ethereum Blockchain and has also integrated Optimism and Arbitrum. For the moment, only Ethereum is available to trade.
Other than trading options, Lyra offers LP staking which is what powers the platform. The LP stakers receive fees from the trades which are paid in APY.
Here’s a picture showing the current APY.
Boosters are also available when you stake their token Lyra on the platform, which also helps with price action. As more demand comes, and fewer tokens are available, price action can benefit from this.
Another benefit of staking their token is rebates. The more Lyra tokens you have staked the less you pay in fees. Take a look a the table below for the rates.
Now talking about the growth and size of the protocol. Lyra has a total value locked of 29M.
And based on the tokenterminal.com website, Lyra has around 400 daily active users on average. This might sound small, but GMX which is one of the main decentralized spot and perpetual exchanges out there has just under 3,000 daily active users on average.
Not only that, but looking at the trading volume for the past 6 months, most of the days it has been around 20M with some crazy spikes of up to 70M in just one day! This kind of volume has helped them amass over 17M in fees in the last 180 days alone.
Metrics
Lyra's price per token is at $0.17 currently with a market cap of 49M, which makes it a low cap (at least for me) with a market cap rank of #449. Some of you degens if it is not under 1M you don't consider it a low cap 😆.
With a max supply of 1Billion tokens, there’s 28% of total tokens in circulation, or 283.106 M to be exact.
The all-time high is at $0.66, which is 3.8x from today’s price. And an all-time low of $0.033.
Unfortunately, Lyra is not on TradingView, I had to take a screenshot on CoinGecko and draw some lines using paint 😅. Sometimes, you got to do what you got to do.
We were on a downtrend, but that got broken a few months ago in Dec when we retested the downtrend line break. Breaking and staying above the $0.20 will be very positive for long-term price action.
Therefore, for support, we have $0.17, $0.15, $0.10, and $0.8 as clear supports.
Then for resistance, we have $0.21, $0.25, and $0.35.
These levels are not set in stones, just some that I see it bouncing over more than 3 times.
Tokenomics
Tokenomics is one of the main things I look into before investing. Because if tokenomics is trash, there’s a high chance price action will suffer.
With 1,000,000,000 Lyra tokens minted, this is the breakdown:
- 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 minimize 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 fulfill its obligations. This will become especially important in V2 when positions are not fully collateralized.
- 5% (50,000,000 LYRA) allocated to incentivize 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 contributor 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 2021, 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 2021, 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 2021, 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.
- Strategic: In August 2022, 3% of the supply was sold at a $100M FDV, implying a token price of $0.10. These tokens were sold from the DAO allocation. This raise was announced in November 2022.
- Seed investor tokens are locked until January 1 2022 and then vest linearly over two years, with the final tokens unlocking on January 1, 2024.
Diversification round (August 2022) investor tokens are locked until September 1st, 2023 and then vest linearly over 3 years, with the final tokens unlocking on September 1st, 2026.
Conclusion
So far, I can say the usability of the platform is very simple and straightforward. Having the option to use Optimism or Arbitrum is amazing which decreases a lot of gas fees and the speed of the transactions.
Staking and Lp staking is a nice bonus, plus the rebate system helps traders decrease the fees they are paying but at the same time decrease the circulating supply which is positive for long-term price action.
The growth of the protocol is good, more people are using it, and the total value locked is stable also.
A big concern is that trading volume in a bear market is way less than in a bull. And, being a protocol for options can have some disadvantages since not everybody is familiar with or into options trading.
Even though it would not be fair to compare this protocol to a project like GMX but just to put things into perspective, while Lyra has around 400 daily active users, GMX has almost 3,000. That’s over 600% difference. But again, not the same type of project and they are not even the same size.
While 400 daily active users might not sound like a lot, for the past 30 days they made over 66M in trading volume, and 1.35M in fees.
Therefore, what would happen if Lyra can reach a consistent 3,000 daily active users?
On the other hand, a direct competitor is Hegic, which has the advantage of trading BTC and ETH. But in terms of growth of the protocol they had less than 200 daily active users on average for the past 30 days, almost half in total value locked, 6 times less in trading volume (10M), and also almost half in fees at 800k.
Therefore, we could say Lyra is looking stronger, but only time will tell if they can continue with this growth rate until the next bull run.
Thank you for reading,
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Disclaimer: This is not financial advice, I am just a guy with a laptop sharing his opinions and experience. This is for entertainment purposes only. Always Do your own research before investing.
