# 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. 

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