The Pro-Bending Tournament is in full effect, and thanks to the backing of Hiroshi Sato, the Fire Ferrets are participating, they make full use of the opporunity, and practice hard for their matches. They even easily make it through their first match.
Outside the ring though, things are heating up in a different way. Mako and Asami are a full on couple, much to the displeasure of Korra. Meanwhiel, Bolin sees himself and Korra being a perfect match, and wants to court her. After receiving Mako's bless, he pursues her, and does get a date with Korra. But for Korra, she sees herself being with Mako. After getting some advice from Pam, she confesses to him that she really likes him, but he shoots her down, which actually leads to her date with Bolin.
This angers Mako, as he thinks she's going to Bolin to get to Mako, which she denies and then turns around to say that he does indeed have feelings for her, which he denies.
This hostility affects them in the next bending match. And it's only through Bolin's determination that they advance by the skin of their teeth.
Korra and Mako try and patch things up between them, but as they do, Bolin hears what they saw and then he becomes distraught. Which leads to another close call in their next match. Only after they work together do they advance to the finals of the tournament.