[LRFC] Deploy Lyra on the Avalanche C-Chain
Simple Summary
This is a proposal to deploy Lyra on the Avalanche C-Chain with initial AVAX, WETH.e and BTC.b vaults.
Abstract
We believe that Lyra has an opportunity to expand its user base, liquidity and the selection of assets and vaults it can offer by expanding to the Avalanche C-Chain with the support of the Ava Labs team.
The Avalanche DeFi ecosystem is home to a variety of protocols that can either be integrated by Lyra (eg. GMX and other perps exchanges for delta hedging) or act as integrators, deploying strategies built on top of Lyra vaults, which would create demand and funnel liquidity to the vaults. There is still an opportunity for an on-chain options protocol to consolidate itself as a leader on Avalanche and there is considerable appetite for options in the ecosystem. This is why we believe that the Avalanche C-Chain would be a prime candidate for a deployment of the Lyra protocol.
About Avalanche
Avalanche is a blockchain platform that utilizes three separate blockchains, the Platform Chain (P-Chain), Contract Chain (C-Chain), and Exchange Chain (X-Chain), to improve scalability and interoperability. These three chains compose a consortium of validators called the Primary Network, which is responsible for Avalanche’s security.
Avalanche operates with the Avalanche consensus algorithm, which is designed to be more efficient than alternative consensus mechanisms while supporting custom virtual machines. The consensus mechanism is akin to a gossiping protocol and checks validators’ transaction confirmations by randomly sampling subsets of primary network validators over a number of rounds, thus allowing all nodes to work in parallel while guaranteeing instant finality. The C-Chain leverages the Snowman consensus protocol, which mimics Avalanche consensus but is optimized for linear blockchains (such as the EVM). Therefore, most Avalanche dApp activity currently transpires on the C-Chain.
In comparison to other smart contract platforms, Avalanche touts sub 2s time-to-finality, faster than any of its peers, which makes it a good fit for DeFi applications that require low latency and fast execution. Avalanche also allows for an unbounded number of validators without sacrificing block time. This allows for an increasing degree of decentralization over time.
The Avalanche architecture allows for scalability through subnets, which are subsets of validators that can deploy and validate fully-customizable and interoperable blockchains.
Avalanche’s DeFi ecosystem has seen significant growth since mainnet launch, with over 300 active DeFi protocols across categories.
Motivation
There is significant demand in the Avalanche ecosystem for a liquid on-chain options protocol and many DeFi protocols on Avalanche are looking to integrate such protocols, which creates a number of opportunities for Lyra. The Ava Labs team can also help with onboarding market makers and liquidity providers that have signaled interest in option strategies and vaults.
Potential integrators include:
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DeltaPrime
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Benqi (sAVAX)
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Steadefi
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Auto Hedge
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CIAN
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Aperture
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HedgeFarm
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StakeDAO
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Struct Finance
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Opportunities to integrate additional perps exchanges on Avalanche for hedging (Aboard Exchange, Hubble, EMDX) on top of the existing GMX integration.
Specification
We recommend the deployment of 3 vaults on Avalanche:
- AVAX vault
- WETH vault
- BTC.b vault
There is liquidity available on GMX to hedge against exposure for these pools. GLP on Avalanche is a basket of AVAX, ETH, BTC and stablecoins with over $65M of liquidity.
AVAX is an obvious choice as it is the native token of Avalanche. ETH and BTC are also widely used in DeFi on the Avalanche ecosystem, with over 600k WETH.e available on Avalanche. BTC.b, the native version of Bitcoin on Avalanche, has significant advantages over other wrapped versions of Bitcoin on other EVM chains as it is non-custodial and can be bridged back and forth between Avalanche and Bitcoin at a fraction of the cost.
Rationale
To reiterate, we believe that there is currently demand in the Avalanche ecosystem for option vaults, both from protocols that would be integrating them and funds / users that are looking for on-chain exposure to options. The presence of GMX on Avalanche makes it a very easy deployment as this is already what Lyra is using for hedging on Arbitrum. We encourage feedback and discussion in this thread and will be posting a snapshot vote soon to gauge the community sentiment around the proposal.
Test Cases
N/A
Copyright Waiver
Copyright and related rights waived via CC0.