# Yield Source

LPs who provide liquidity to a pTKN/Paired Asset pool (e.g., pOHM/ETH) earn yield from protocol fees triggered by:\
Wrap and unwrap actions\
Arbitrage between TKN and pTKN markets\
Continuous spot trading volume within the Pod’s LP

These interactions generate wrap fees, AMM buy/sell fees and >unwrap fees. Most of the fees are retained in the Pod, either directly (via auto-compounding LP Rewards) or indirectly (through CBR increases and pTKN burns).\ <br>

The AMM structure follows a standard x\*y=k invariant with full-range liquidity. This ensures pricing is always available and arbitrage remains frictionless, allowing value to be extracted consistently by LPs across market regimes.\
\
Unlike traditional liquidity sourcing schemes such as liquidity mining, where yield decreases as TVL scales, VF yield remains actually improves as TVL scales. This is because VF does not rely on diluting the token supply or short-term mercenary capital. Instead yield scales with protocol usage whilst LPs retain exposure to upside of CBR increases.

<figure><img src="/files/XppJvIKqolUnAPC1Baej" alt=""><figcaption></figcaption></figure>

This structure avoids capital flight, incentivizes active market participation, and creates an enduring value base that aligns liquidity with demand rather than emissions. All parties benefit from markets scaling and maturing, which is a notable distinction when comparing to traditional yield farming models.


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