Amplified Volatility

Choosing the correct pairing asset for a Pod can amplify the potential voaltility, and thus performance of a Pod. The more volatile the pTKN/Paired Asset pair, the greater the likelihood of: Price divergence from fair value (based on external market benchmarks) Arbitrage-driven interactions Fee generation from correcting these imbalances

Protocols can optimize this effect by selecting counter-correlated or uncorrelated assets as pairings. For example, pairing a high-volatility DeFi token with ETH or a stablecoin amplifies price dislocations and creates recurring arbitrage windows. This impact can then be further amplified by pairing with an asset that is counter-correlated or negatively correlated with the core LP position of TKN, resulting in arbitrage not just between pTKN/TKN but also in divergences between the prices of the two paired assets.

Yield is therefore a direct function of volatility, volume, and fee structure. LP returns increase linearly with system usage but can scale disproportionately during high-volatility environments.