Backed by Largest DeFi VC Framework Ventures and ParaFi Capital, Lyra recently launched on testnet to offer risk-managed options trading to DeFi traders and liquidity providers
Lyra, a protocol for options trading on Ethereum, announced today a $3.3M seed raise co-led by the largest venture capital firms in the decentralized finance (DeFi) space, Framework Ventures and ParaFi Capital, with support from the DeFi Alliance, Divergence, Orthogonal, Robot Ventures and Apollo Capital. Built on Optimism, an Ethereum layer 2 scaling solution, Lyra is the first options protocol to manage risk for its liquidity providers, which enables it to offer the best pricing and liquidity for traders.
Founded in 2020 by core contributors from the DeFi protocol Synthetix and other traditional finance experts, Lyra’s goal is to make options trading available to everyone. A key financial primitive, options allow users to hedge risk, obtain leverage and create any payoff structure. While the recent growth of DeFi has seen many on-chain financial products thrive, options have yet to find traction.
“Options protocols have struggled to offer competitive pricing and liquidity,” said Michael Spain, co-founder of Lyra. “This is because it’s too expensive to manage risk on layer 1, which is essential when trading options. Without risk management, high fees are the only recourse, leading to untradable prices. By designing for layer 2, Lyra’s mechanism is able to actively manage risk, providing confidence to liquidity providers and enabling affordable pricing for traders”.
Lyra is one of the first protocols to deploy on Ethereum’s most promising layer 2 scaling solution, Optimism, which provides instant transactions. Even more importantly, Optimism enables Lyra to be the first protocol to actively manage risk for its liquidity providers. Delta risk is hedged with automated trading on Synthetix, the leading derivatives trading protocol also backed by Framework Ventures. Furthermore, Lyra’s spreads change dynamically based on vega exposure, charging higher fees for trades that increase risk.
“By leveraging layer 2 scalability with Synthetix composability, Lyra enables a truly permissionless risk-managed options marketplace for DeFi traders and liquidity providers,” said Michael Anderson, co-founder of Framework Ventures. “Lyra empowers the DeFi community with greater financial opportunity and raises the industry’s bar to new heights.”
“Options have been a core missing piece in the DeFi stack,” said Santiago Roel Santos, Partner at ParaFi Capital. “Lyra’s novel on-chain pricing mechanism, Synthetix integration, and deployment on Optimism will introduce traders and liquidity providers to a scalable and capital-efficient options protocol. We’re excited to back the Lyra team in their journey to bring permissionless options markets to the masses.”
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With money from the raise, Lyra aims to hire internally and focus on expanding its engineering team. In addition to the above-mentioned participants in the fundraise, Lyra also received critical support from many impressive angel investors, including Kain Warwick and Jordan Momtazi of Synthetix, Jinglan Wang of Optimism, Stani Kulechov of Aave, Hasu, Ryan Adams of Bankless, Anton Bukov of 1inch, Tyler Ward of Barnbridge, and Anthony Sassano of The Daily Gwei.
To explore the Lyra platform, users can visit the Lyra dApp and connect their MetaMask wallet to begin trading. Lyra is currently live on the Optimism Kovan testnet, where users can experience the trading interface and trade options using test tokens.
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