Frankly speaking Mysql should not make lag at all. Especially in that way like you explained. I never saw something like mysql lag in my entire life and I'm working with servers more than 10 years. Even by default settings mysql can hold pretty huge data bandwidth. I don't understand why you both decided like that.
However, there can be many other reasons why this happens. Try do the tests to find out what's the real reason of lag.
A few suggestions::
1. Try default Orion server pack with same mysql and database. Just change ip and most important settings to make server running. Nothing else.
2. Try different system - clean, without custom items etc.
3. Re-install full Lineage 2 game client.
Yes I think so, because when playing in localhost there is often lag especially outside the cities and in other places lag, only inside the dungeons everything works very smoothly.
so I think it's mySql, pc spec 32gb 3060ti older i7 6700 processor