👨‍🌾Volatility Yield Farming

Arbitrage and Volatility Farming

Arbitrage

Arbitrage involves exploiting varying prices for the same asset by buying and selling across different markets or in derivative forms to generate profits.

Volatility Farming

Volatility Farming operates by capitalizing on perpetual fluctuations in asset prices. Users and MEV bots actively seek arbitrage opportunities in the dynamic market to make quick profits.

The protocol goes a step further by creating arbitrage opportunities itself. Through the introduction of PADs, a secondary market is established where price disparities for the same asset can occur, providing a platform for arbitrageurs to operate.

In the context of pods, arbitrage opportunities arise when the prices of TKN and rTKN deviate beyond the cost of wrapping or unwrapping. When users leverage pods to seize these opportunities, the profits are collected and distributed based on PAD configuration.