Empirical data on insufficient market maker incentives in the Lyra options protocol leading to wider spreads is limited. Lyra’s AMM model relies on liquidity providers (LPs) depositing stablecoins into market maker vaults, earning fees but facing risks from one-sided trading. Studies suggest inadequate incentives can reduce LP participation, limiting strike prices and increasing bid-ask spreads. A 2023 study on options market makers found hedging activities driven by adverse selection risk widen spreads, particularly in options markets. Lyra’s integration with Synthetix and GMX for hedging aims to mitigate this, but low liquidity persists, especially for less popular assets. Wider spreads are observed when LP incentives fail to attract sufficient capital, reducing open interest and market efficiency.