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Trading Rewards
To incentivise trading activity and market liquidity on the Lyra Protocol, $LYRA will be distributed to users who trade on the protocol based on:
  1. 1.
    The cumulative fees that they pay to LPs
  2. 2.
    The cost of locking capital to collateralise option selling
LYRA will be distributed to traders according to the rules established by the Council in LEAP-8. Please note that 'long' or 'short' positions are defined by whether the trader is buying or selling options, not on the directional bet of their trade.

Trading Fee Rewards

The following rates represent the maximum rate if the cap is not reached (per asset, round).
  • Long positions (the purchase of a call or a put) will earn 0.8 LYRA per $1 of fees paid
  • Short positions (the sale of a call or a put) will earn 1 LYRA per $1 of fees paid

Short Collateral Rewards

To incentivise traders to take short options positions on the protocol, a rate in LYRA tokens will be paid on short collateral. The rate paid will differ slightly for sUSD collateral and sETH, sBTC and sLINK collateral. The following rates represent the maximum rate if the cap is not reached (per asset, round).
  • rate A: LYRA Liquidity Pool reward rate at start of the round * 2/3 * time short position held: for dollar denominated collateral (denoted as rate A, quoted in LYRA per $1000 per day)
  • rate B = LYRA Liquidity Pool reward rate at start of the round * 2/3 * (ETH Price at start of round/$1000) * time short position held: for ETH denominated short collateral (denoted as rate B, quoted in LYRA per ETH per day)
The rate for each short collateral will be 2/3 of the rate of the corresponding liquidity pool, i.e. sETH shorts will earn 2/3 of the sETH option market LPs. These rates are deliberately less than the rate for Lyra LPs. This is to drive liquidity to the Lyra options AMM and compensate LPs for their relative lack of flexibility, as funds are locked for the duration of the round.
Example: At the commencement of the round, the ETH price from the Chainlink Oracle feed was equal to $4,000. The Liquidity Pool rate is equal to 10 LYRA / $1000 / day. Alice opens a short call position, collateralized with 1 ETH, and holds for 20 days. Alice is entitled to short collateral rewards worth:
RateB=RateA(ETHprice/1000)timeHeld=10(4000/1000)20=800LYRARate B =RateA * (ETH price/1000)*timeHeld=10 * (4000/1000) * 20 = 800 LYRA