> For the complete documentation index, see [llms.txt](https://docs.peapods.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.peapods.finance/volatility-farming-1.md). # Volatility Farming **Volatility Farming** is a method of earning yield based on the fluctuations in the price of assets. It leverages price discrepancies between wrapped tokens **(pTKN)** and their underlying assets **(TKN)** to generate profits for liquidity providers. * **Arbitrage and Volatility:**\ As the price of the underlying token (**TKN**) fluctuates, the price of the wrapped token (**pTKN**) does not immediately reflect these changes, creating arbitrage opportunities. When the price of TKN moves but **pTKN** remains stable, arbitrageurs can buy **pTKN** at a discount or sell it at a premium, depending on the situation. * **Protocol Revenue:** \ These arbitrage transactions help generate real yield for liquidity providers by collecting fees from wrapping, unwrapping, and trading actions.