Lyra integrates with Gelato to automate LP incentives

Lyra integrates with Gelato to automate LP incentives

Since the token launch, Lyra has been incentivising a number of pool 2 staking programs to ensure there would be sufficient liquidity for trading on both Optimism and Ethereum Mainnet. While effective in achieving this objective, the method of incentive allocation could be more efficiently designed. Over this period, the DAO was spending 65,000 LYRA/day (5m LYRA/2.5 months, 2.4% supply in 1 year) to attract a total of $6m in liquidity across Uniswap and SushiSwap.

Gelato Network is Web3’s premier automation network, enabling developers to automate a wide variety of arbitrary smart contract executions on and across all EVM-based compatible blockchains such as Optimistic Ethereum. Examples of use cases developers have built on top of Gelato include Limit Orders on AMMs like Uniswap, automatic compounding of yield farming vaults, Aave liquidation protection, MakerDAO debt ceiling updates, automated liquidity management, and even the petting of Aavegotchis.

As outlined in LEAP-21, from today Lyra will utilize Gelato to efficiently distribute LYRA/ETH liquidity provider rewards on Optimistic Uniswap V3. The LYRA DAO will establish a base layer of liquidity on Uniswap v3, depositing ~$300,000 worth of ETH and LYRA, and using a managed Uniswap v3 contract (e.g. Gelato network) to ensure that the liquidity is active. This should yield ~1.8x more capital efficiency per $1 of liquidity in the pool.

How to provide liquidity

  1. Connect to the Optimistic Ethereum Network
  2. Acquire LYRA and WETH
  3. Deposit your liquidity to LYRA/WETH G-UNI pool here
  4. Deposit your G-UNI tokens in the Lyra staking contract here

Other important information

  • Rewards for the L1 Sushiswap pool should cease on April 1st, as per LEAP-13. It will be deprecated.
  • Following April 1st, the Uniswap pool rewards (on Optimism) should be reduced to target 10,000,000 LYRA / year (or 27397 LYRA/day).
  • The target range (0.2x, 5.0x) can be updated at the earliest of [once per month, 50% change in the spot price from last update], with a minimum notice of 24 hours from the Council to LPs. Should the price of LYRA fall outside of the incentivized range, the Council can update the incentivized range immediately.When token trading volumes are high, the Council should be quick to increase rewards (no notice required) and decrease rewards when token trading volumes are low (requiring 48 hours notice).
  • Tighter ranges can also be incentivized by Council if desired, for greater capital efficiency.
For more information about the rationale for the change in strategy, along with future plans for LP incentives, read LEAP-21 here

About Lyra

Lyra is an open protocol for trading options built on Ethereum. Lyra allows traders to buy and sell options that are accurately priced with the first market-based, skew adjusted pricing model. Lyra also quantifies the risks incurred by liquidity providers and actively hedges them, encouraging more liquidity to enter the protocol.

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