Founder Fireside Chat with Mike Spain of Lyra

Chaz Schmidt
Aug 24, 2021
|3 minutes read

The Founder Fireside Chat series hosted by DeFi Pulse interviews DeFi founders in the hopes of offering readers an opportunity to better understand their perspective and what drives them to build their vision.

Mike Spain, co-founder of layer 2 trading options protocol Lyra, joins us for a chat this week. Mike highlights the value of questioning your assumptions

What are you building and what sets it apart from similar offerings in the space?

Lyra is an AMM for trading options that is native to Optimism. On-chain options have struggled with poor pricing and liquidity, which are caused by the high risks incurred by LPs. Managing risk requires the ability to measure aggregate exposure to the greeks, which is too expensive on layer 1.

Launching on Optimism allows us to be the first project to hedge delta and vega risk for our LPs. This protection provides confidence, leading to higher liquidity and competitive pricing. Our pricing model also generalises well, allowing us to pioneer options markets for assets beyond ETH and BTC (like DeFi tokens).

Which quality of the Scalability Trilemma do you find to be the most important?

Scalability is the most important quality since you can’t serve a global market without high throughput and low latency. However, both security and decentralisation are also critical, with many billions of dollars stored on-chain and an uncertain regulatory environment.

Rollups are the best solution to the trilemma, offering large increases in scalability whilst inheriting the security of Ethereum’s base layer. Rollups sacrifice some decentralisation in that the validator count is lower, but they still allow users to be confident their funds cannot be stolen using either fraud (optimistic) or validity (zk based) proofs.

What is the most critical part of forming a lasting community?

Ensuring that the community has a legitimate say in the direction of the protocol. Time in the Synthetix community has taught us that when you’ve got thousands of people in discord and only a handful of core contributors, the best ideas often come from outside the team.

What is something in DeFi that you think more people should be paying attention to?

The design space for DeFi projects has been significantly expanded due to the arrival of layer 2. Lots of mechanisms that weren’t viable due to gas costs and latency issues now work if you’re willing to build your protocol natively on a rollup.

What is a critical lesson you have learned on your journey?

In an industry that moves at light speed, it’s easy to feel like you have to rush. But ‘move fast and break things’ isn’t viable when funds are at stake. It’s important to take your time, question assumptions and try to minimise complexity where possible.

What is your favorite meme from the DeFi community?

We’re big fans of the future of France meme. The French Army has a branch called the ‘French Foreign Legion’, which is a highly specialized infantry unit that is open to recruits from any country in the world. Any Foreign Legion soldier who spills blood for France on the battlefield can automatically apply to become a French citizen under a provision known as ‘French by spilled blood’. This is the inspiration behind the Lyra Legion – a global unit which exists to defend the future of France. Rest assured, those who get rekt on the trading floor will gain auto-entry to the Legion.

Thanks for reading! DeFi is a busy industry so we’d also like to thank Mike for joining us.

Follow Mike Spain on Twitter and learn more about Lyra by following @lyrafinance on Twitter or by jumping into the community discord.