How Do Stablecoins Mitigate Currency Risk in Cross-Exchange Arbitrage?

Stablecoins are cryptocurrencies pegged to a stable asset, typically the US dollar, minimizing the risk of price volatility. By using stablecoins (e.g.

USDC, USDT) as the base currency for spatial arbitrage, the arbitrageur isolates the risk to the price discrepancy of the volatile asset itself. This eliminates the risk of the base currency fluctuating wildly during the transfer time between exchanges.