Volatility Farming

Volatility Farming is a yield-generation mechanism that captures value from market price volatility.

By embedding fee mechanisms directly into the Pod lifecycle (such as wrapping, unwrapping, and trading), it delivers real yield to liquidity providers (LPs), creating an organic, non-inflationary incentive loop.

Pods

Pods are smart vaults that wrap base tokens (TKN) into synthetic tokens (pTKN).

pTKN is fully composable and can be used across multiple functions within and beyond the Macaron ecosystem. This flexibility makes pTKN both a yield-bearing asset and a modular building block for advanced strategies.

Action	Fee	Allocation
Wrap	0.3%	80% for LP Staking, 10% for pTKN Burn, 5% for Creator, 5% for Buyback & Bury MACARON
Unwrap	0.8%	80% for LP Staking, 10% for pTKN Burn, 5% for Creator, 5% for Buyback & Bury MACARON
Create pod	100 MACARON	100% Buried

Creators need to pay a fee of 100 MACARON to activate their pod. All fees collected will be burned.

Collateral Backing Ratio (CBR)

Each Pod maintains a Collateral Backing Ratio (CBR), which defines the amount of TKN backing each pTKN:

$$CBR = TKN_{Balance} / pTKN_{Supply}$$

As Pods generate revenue through wrapping, unwrapping, trading activity, and arbitrage flows, a portion of this revenue is used to burn pTKN supply. Since the underlying TKN balance remains intact, this causes the CBR to increase over time and enables each pTKN to redeem a larger share of TKN.

Example:

• TKN balance in Pod: 1,200

• pTKN in circulation: 1,000

• Resulting CBR: 1.2

Each pTKN is redeemable for 1.2 TKN (less applicable fees). Likewise, wrapping 1.2 TKN would mint 1 pTKN.

CBR increases irreversibly and does not decline. This makes pTKN a value-accruing asset that grows in redemption value over time.

Yield Source

LPs who provide liquidity to a pTKN/Paired Asset pool (e.g., pMACARON/SOL) 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