Stellar Community Fund

Lusty Finance

SCF #43

SCF #44

Description

Lusty is a DeFi options yield protocol built on Stellar that allows users to earn instant yield by selling covered calls and cash-secured puts on XLM. Users deposit collateral, select a strike price, and receive LUSD upfront immediately; no waiting for expiry. Pricing is handled onchain via a Black-Scholes engine with a volatility smile adjustment, ensuring fair and dynamic premiums.

At expiry, positions settle automatically: if the spot price stays within the strike, collateral is returned; if assigned, the user exits at their chosen strike. The protocol also includes an XLM ↔️ LUSD swap at live Oracle spot prices with a 0.1% spread, and a Season 0 points leaderboard to reward early participants. LUSD is a testnet stablecoin minted by the protocol, pegged 1:1 to USD, used for upfront payments, put collateral, and swap liquidity.