> For the complete documentation index, see [llms.txt](https://docs.arbera.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.arbera.io/arbera-overview/volatility-farming.md).

# Volatility Farming

<figure><img src="/files/s8V0eKTEKb5P2I7fnVpg" alt=""><figcaption></figcaption></figure>

### **The Mechanics of Volatility and Arbitrage**

Volatility farming exploits market price differences when the price of an original asset diverges from its synthetic counterpart (Den); arbitrageurs—primarily MEV bots—step into profit by buying the **lower-priced asset** and selling the **higher-priced ones**. `brTOKENS` represents liquid receipts of assets within the Den, which is fully backed by `TOKENS` (the main asset). Users can easily purchase `TOKEN`, wrap it into `brTOKEN`, and sell it. Alternatively, they can buy `brTOKEN`, unwrap it back into `TOKENS`, and sell, taking advantage of arbitrage opportunities.

## Key Features:

1. **Asset Creation (Dens)**

   **Arbera** enables the creation of arbitrage markets using wrapped versions of any token, known as **Dens,** in the Arbera ecosystem. Each Den token`brTOKEN` (receipt token) is fully collateralized 1:1 by its corresponding original asset`TOKEN`&#x20;

   * **Conversion:** Users can convert their `brTOKENS` into the original asset at any time, ensuring that the value of Den tokens remains closely linked to the value of the underlying assets.
   * **Yield Generation:** Dens generate a yield from every trade, benefiting users who hold `brTOKENS`**.**
2. **Single-Sided Token Wrapping**

   Users can wrap their `TOKEN` into its synthetic version (`brTOKEN`) through the Den.

   #### Example:

   * **Wrapping `BERA`:** Create a synthetic version of `BERA` (e.g., `brBERA`) and mint corresponding`brBERA` tokens.

   #### Benefits:

   * **Yield Farming:** Simply by holding`brBERA`, users benefit by farming the growth of the underlying `TOKEN` through the volatility farming protocol.
3. **Liquidity Provision**
   * Users can provide liquidity for Den pairs on Kodiak, such as **brTOKEN-HONEY** or **BERA**\* pairs.
   * **Volatility Rewards:** Earn rewards via`brTOKENS` (e.g.,`brBERA`).
   * **Protocol-Generated Fees:** Accumulate fees via the ARBERA token through buybacks generated from volatility farming, earn Bera Governance Tokens (BGT) via Validator Vote Gauging, and other ecosystem token rewards.

***\*Note: Liquidity can also be provided for other approved and whitelisted paired assets.***


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