Lyra

Derive, formerly known as Lyra, was founded in 2021 and has established itself as a decentralized protocol for trading cryptocurrency options and perpetual contracts. The company's history began with the launch of Lyra V1 in August 2021, becoming one of the first native protocols on the Layer 2 scaling solution, Optimism. This initial version introduced the innovative Lyra Market Maker Vaults, a novel Automated Market Maker (AMM) for options. In a significant step towards community governance, the Lyra Launch Council was formed in August 2021 to oversee the mainnet launch and token distribution. Co-founder Nick Forster has been a public voice for the company, articulating its vision and market analysis.

The protocol functions as a decentralized exchange (DEX), a peer-to-peer marketplace where financial transactions occur directly between traders without intermediaries like banks or brokers. It operates on the Lyra Chain, an Ethereum rollup built on the OP Stack, which ensures a high-throughput, low-cost execution environment while inheriting the security of the Ethereum mainnet. In a major evolution, the protocol transitioned from its original AMM-based model to a central limit order book (CLOB) system with on-chain settlement in its V2 launch during Q4 2023. This redesign, now called the Derive Protocol, is a generalized risk engine that can support various financial instruments, including options, perpetual futures, and spot assets.

Derive's business model centers on generating revenue from fees within its ecosystem. These fees include trading fees on transactions that increase the system's open interest, liquidation fees charged to users whose positions are closed, and interest rate spreads from borrowing activities. The platform serves two primary user groups: options traders and liquidity providers. Traders can buy and sell options on various crypto assets to hedge portfolios or speculate on market movements. Liquidity providers deposit stablecoins into Market Maker Vaults and, in return for providing the necessary liquidity for trades, they earn a proportional share of the trading fees paid by options traders. The protocol also features a native utility token, originally LYRA and set to become DRV, which is used for staking to backstop the protocol, participating in governance, and receiving incentives.

Keywords: decentralized exchange, crypto options, perpetual contracts, DeFi protocol, automated market maker, liquidity provider, on-chain settlement, central limit order book, Ethereum rollup, OP Stack, Lyra Protocol, crypto derivatives, financial instruments, decentralized finance, risk management, blockchain, tokenomics, smart contracts, web3, digital assets, cryptocurrency trading