How does Lyra work?

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How does Lyra work?
This page provides an overview of the different areas of Lyra, including the Lyra Protocol.
What is Lyra?
To begin, we should make clear distinctions between the different areas of "Lyra", some of which may confuse new users.
The Lyra Protocol: A suite of smart contracts that create an automated market maker for trading options on ERC-20 tokens on the Optimistic Ethereum Blockchain. Learn more about the protocol here.
The Lyra Interface: A web interface that allows for easy interaction with the Lyra Protocol. The interface is one of many ways one may interact with the Lyra Protocol. You can access the interface here.
Lyra Governance: A governance system for governing the Lyra Protocol, enabled by the LYRA token. Read more about governance here.
The following video is a great introduction to Lyra Protocol, courtesy of Genesis Volatility.
What is the Lyra Protocol?
Lyra is an options automated market maker (AMM) that allows traders to buy and sell options on cryptocurrencies against a pool of liquidity. The Lyra protocol has two key user groups, liquidity providers and options traders. 
Liquidity providers (LPs) deposit sUSD (a stablecoin) into one of the asset-specific Lyra Market Maker Vaults (MMVs). This liquidity is used to make two-sided (buy and sell) options markets for the asset that the vault specifies (e.g. ETH Market Maker Vault LPs quote options on ETH). LPs deposit liquidity to the vault to earn the fees paid when options are traded. 
Traders use Lyra to trade options. They can either buy options from or sell options to the MMV. Traders pay fees (in the form of the market-making spread) to LPs, as compensation for their liquidity.
Get started by learning about how Lyra's AMM prices options here.
Options TLDR
An option gives the holder the right to buy (call option) or sell (put option) an asset at a specified price (the strike price) at a certain time (expiration). 
Example: The ETH 3000 strike call expiring in 14 days gives the holder the right to purchase 1 ETH for $3000 in 14 days' time. 
This simple definition gives rise to a universe of possibilities - calls and puts can be combined in different ways to create any imaginable payoff! This flexibility is a key reason why options are one of the most traded products in global financial markets. In particular, traders use them to:
Hedge their risk 
Lock in a payoff 
Generate extra income on their assets
Speculate on future price movements with precision
Get leverage
And so much more! But all of that is out of the scope of a TL;DR. Learn more about options here.
Options Pricing & The AMM
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What is Lyra?
What is the Lyra Protocol?
Options TLDR