The latest decentralized finance (DeFi) protocol to draw in the big venture capital investors is Lyra, which plans to launch layer 2 options trading on Ethereum.
Other contributors included the DeFi Alliance, Divergence, Orthogonal, Robot Ventures, Apollo Capital, and Magnet Capital. A number of prominent individuals also contributed including the founders and co-founders of Aave, 1inch, Synthetix, in addition to Ryan Sean Adams from Bankless and The Daily Gwei’s Anthony Sassano.
Lyra claims to be the first options protocol to manage risk for its liquidity providers, enables it to offer competitive pricing and liquidity for traders.
Options are a little like futures in that traders can buy contracts that give them the “option” to buy or sell an underlying asset for a certain price, called a strike price, and at a certain time.
DeFi Options on L2
The protocol will deploy on Ethereum layer 2 scaling platform Optimism which uses optimistic rollups to scale throughput. The move enables Lyra to be the first protocol to actively manage risk which is hedged with automated trading on derivatives trading platform Synthetix.
Co-founder of Framework Ventures, Michael Anderson, praised the innovation of the project stating that it raises the industry’s bar to new heights.
“By leveraging layer 2 scalability with Synthetix composability, Lyra enables a truly permissionless risk-managed options marketplace for DeFi traders and liquidity providers.”
Santiago Roel Santos, Partner at ParaFi Capital, added that options have been a core missing piece in the DeFi stack. Michael Spain, Lyra’s co-founder, explained that options protocols have struggled to offer competitive pricing and liquidity because it’s too expensive to manage risk on layer 1.
Lyra is currently live on the Optimism Kovan testnet and users can connect via MetaMask to explore the platform. There was no official date specified for the mainnet launch.
Synthetix plans to launch its own Optimism-based layer 2 platform this week.
Thales to launch L2 binary options
Lyra is not the only platform delving into the layer 2 options scene. On July 13, binary options platform Thales completed a $2.5 million DAO-first funding round. Framework Ventures also co-led this funding round along with a raft of others.
Thales also intends to leverage the Synthetix protocol upon which it was built to support markets for more than 60 different assets. These will include cryptocurrencies, commodities, equities, and index products before it expands into sports markets.
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