lye (n.) Look up lye at Dictionary.com
Old English læg, leag "lye, water impregnated with alkaline salt absorbed from the ashes of wood by leaching," from Proto-Germanic *laugo (source also of Middle Dutch loghe, Dutch loog, Old High German louga, German Lauge "lye"), from PIE root *leue- "to wash" (see lave).

The substance formerly was used in place of soap, hence Old High German luhhen "to wash," Old Norse laug "hot bath, hot spring," Danish lørdag, Swedish lördag "Saturday," literally "washing-day," "the day appropriated by the Scandinavians to that exercise" [Century Dictionary]. Chamber-lye in early Modern English was the name for urine used as a detergent.