The effectiveness of Lyra V2’s market maker incentive model in its decentralized options protocol hinges on its shift from an AMM to a central limit order book (CLOB) system, enhancing liquidity and pricing efficiency. By integrating portfolio margin and a reverse Dutch auction for liquidations, Lyra V2 incentivizes market makers to provide competitive quotes and manage risk effectively. The model leverages LYRA token rewards and trading fee distributions to attract liquidity providers, fostering a robust ecosystem. Data shows Lyra V2 has processed over $1 billion in notional volume, indicating strong market engagement. However, competition from centralized exchanges and regulatory uncertainties pose challenges. Overall, the incentive structure promotes transparency and capital efficiency, positioning Lyra V2 as a leader in DeFi options trading.