When a domain reaches its expiry date, its status will be changed from ACTIVE to EXPIRED and it will remain as EXPIRED for 30 days. During this period of time, the domain will no longer resolve to the name-servers, however, the domain holder can still renew the domain during this period.
Afterwards, the domain status will be changed from EXPIRED to REDEMPTION and it will remain like that for another 30 days. During the REDEMPTION period, the domain holder can still renew the domain but s/he also has to pay the redemption fees($50). If the domain owner fails to renew during the redemption period, the domain will be deleted from the .ly domain zone and will be available for anyone to register.