Can a Stablecoin-to-Stablecoin Liquidity Pool Experience Impermanent Loss?

Yes, a stablecoin-to-stablecoin pool can experience impermanent loss, although the magnitude is typically very low. Impermanent loss occurs due to price divergence.

Since stablecoins are designed to maintain a 1:1 peg with a fiat currency (like the US dollar), their price divergence is minimal. However, if one stablecoin temporarily loses its peg (de-pegs), the pool will experience a small impermanent loss until the peg is restored.