On-chain options protocols let you buy and sell crypto options contracts directly from your wallet — no KYC, no custodian, self-custody of collateral. The two leading DeFi options platforms in 2026 are Lyra Finance and Aevo.
Why Options On-Chain
Deribit dominates crypto options with 90%+ of BTC and ETH options volume. But Deribit is centralized, requires KYC, and holds user funds.
DeFi options offer:
- Self-custody: collateral stays in your wallet until settlement
- Permissionless access: no KYC or geographic restrictions
- Composability: options positions can interact with other DeFi protocols
The tradeoff: lower liquidity, higher slippage for large positions, and smart contract risk.
Lyra Finance (Base and Optimism)
Lyra is an AMM-based options protocol. It uses a dynamic options AMM that automatically prices and settles options contracts using a Black-Scholes model with volatility adjustments.
How Lyra works:
- Liquidity providers deposit ETH or sUSD into Lyra vaults
- The vault acts as options seller (writer) for all options buyers
- Options are priced using a modified Black-Scholes formula with live volatility inputs from oracle data
- LPs earn premium income from option buyers; their risk is being short options (theta positive, delta/gamma exposure)
Supported assets: ETH and BTC options on Base and Optimism. Strikes and expiries available weekly and monthly.
Newport architecture (Lyra v2): Rewrote the system for better capital efficiency. LPs can now be partially hedged, reducing directional exposure.
Aevo
Aevo is a hybrid on-chain options and perpetuals exchange using an off-chain order book with on-chain settlement (similar to dYdX's model but applied to options).
Architecture:
- Orders match off-chain (fast, no gas per order)
- Settlement happens on-chain (self-custody of collateral)
- Runs on its own rollup (Aevo Chain, based on OP Stack)
Products:
- Vanilla ETH and BTC options (calls and puts, various strikes/expiries)
- Pre-launch tokens: Aevo lets users trade options on upcoming token launches before they go live — a novel product not available on Deribit
- Perpetuals: standard perp trading alongside options
AEVO token: Aevo's governance token. Staking earns protocol revenue share.
DeFi Options Strategies
Covered calls (income generation):
- Hold ETH
- Sell a call option at a strike above current price
- Collect premium; if ETH stays below strike, you keep ETH + premium
- If ETH exceeds strike, your ETH is called away — you capped your upside but received premium
Protective puts (insurance):
- Hold ETH
- Buy a put option at a strike below current price
- If ETH drops below strike, your put gains offset losses
- Premium paid = cost of insurance
Straddles (volatility bets):
- Buy both a call and put at the same strike
- Profitable if ETH moves significantly in either direction
- Loses if price stays near the strike (theta decay kills both legs)
Comparing DeFi Options to Deribit
| Feature | Lyra/Aevo | Deribit | |---------|----------|---------| | Custody | Self-custody | Custodied | | Liquidity | Lower | Highest | | KYC | None | Required | | Products | ETH/BTC options | ETH/BTC/SOL + more | | Settlement | On-chain | Cash settled | | Pre-launch tokens | Aevo only | No |
For large options positions: Deribit's liquidity is unmatched. For permissionless access and self-custody: Lyra and Aevo.