Is Stablecoin Arbitrage Risk-Free?

No, stablecoin arbitrage is not risk-free. The primary risk is the speed of execution and the possibility of a sudden market shift (slippage risk).

For algorithmic stablecoins, the risk is that the volatile governance token crashes during the arbitrage process, resulting in a net loss instead of the expected profit. Furthermore, smart contract risk and gas fee volatility pose additional risks.