[LRFC] Migrate $LYRA to $LDX

Simple Summary

Migrate $LYRA to $LDX, the native utility token of the Lyra Derivatives Network.

Abstract

This proposal outlines a path to migrate $LYRA to a new token called $LDX. The structure and supply of $LDX will be identical to $LYRA and holders of both $LYRA and $stkLRYA will convert 1:1 to $LDX. A snapshot on May 8 will determine the initial balances of the $LDX token.

Motivation

Since launching in January, Lyra V2 has settled over $1.1bn is and growing at 50% MoM.

With the introduction of V2, the scope and scale of the project has expanded significantly. Whereas Lyra V1 referred exclusively to a smart contract protocol, we now have four distinct components:

  1. Lyra Chain - an Ethereum rollup built with the OP Stack.
  2. Lyra Protocol V2 - A risk engine capable of margining arbitrary derivatives.
  3. Lyra Exchange - A high-performance, decentralised exchange.
  4. Lyra Wallet - A self-custodial wallet built with Coinbase’s Wallet as a Service.

With two more significant components coming in the next few months, it’s reasonable to revisit the question - what is Lyra? It’s become much more than an options protocol. We believe the correct framing is to think of these components as making up the Lyra Derivatives Network.

This expansion in vision necessitates a similar growth in the native token: from a simple protocol governance asset to one that is capable of aligning incentives across all components of the network.

Specification

$LDX will be the native token of the Lyra Derivatives Network, a composable ecosystem of derivatives products.

$LDX Details

  • The maximum total supply of $LDX tokens will be 1,000,000,000 (the same as $LYRA)
  • Each LYRA/stkLYRA holder will have a 1:1 claim on $LDX tokens as determined by their balance at the snapshot.
  • No new tokens will be issued.
  • $LDX Mechanics
    • 20% of fees generated by the network will be used to buy back $LDX which will be distributed to $LDX stakers.
    • An upcoming proposal on $LDX tokenomics will explain how staking will function in the network. It will also explore other uses for $LDX, such as decentralising the operation of Lyra Chain, acting as a consumptive resource in the network, or improving the trading experience through rebates.

$LYRA to $LDX Migration sequence

All dates refer to midnight UTC time.

Step 1 - Reward Unlock (April 24)

On April 24, all rewards earned during the Launch Season will become claimable.

Step 2 - Liquidity Pause (May 1)

On May 1, all DAO-funded LYRA liquidity programs will end. Liquidity providers will be encouraged to remove their liquidity from this time.

Step 3 - $LDX Snapshot (May 8)

On May 8, a snapshot will be taken of LYRA and stkLYRA balances on the Ethereum, Optimism and Arbitrum networks. $LDX balances will be seeded per this snapshot.

$LYRA Rewards to $LDX Points

The current $LYRA rewards program as specified in LYRA Economics V2 will finish on May 8. It will be replaced by a new program that enables users to earn $LDX tokens. This program will utilise a portion of the remaining 127.5m tokens allocated to rewards.

Interim Protocol and DAO governance

In the period before the $LDX launch, protocol and DAO governance will continue with balances equivalent to the snapshot values. This will include all LYRA and stkLYRA (not just stkLYRA). The configurable parameters are as follows:

  • Voting Duration = 3 days
  • Quorum = 4%
  • Proposition threshold = 0.5%

Step 4 - LDX Launch (Q3)

The $LDX launch will aim to happen before the end of Q3. The exact date depends on liquidity and exchange partnerships. $LDX will aim to launch with liquidity on centralised and decentralised venues.

Rationale

The ideas in this proposal overlap with the original version of [LRFC] Move Governance to Lyra Chain. While that LRFC discussed the migration of the token, this one extends the concept significantly by advocating for a new name ($LDX), tokenomics and rewards. The other proposal has been updated to focus solely on the technical migration of governance to Lyra Chain, with all material related to the token addressed in this LRFC.

Test Cases

N/A

Configurable Parameters

N/A

Copyright Waiver

Copyright and related rights waived via CC0.

2 Likes

Why 20%? Why not 100%?

2 Likes

I would say 20% is a good start. Cannot be 100% because the DAO will have expenses to cover too along the year, so some funds would require to be allocated for that.

2 Likes