Provide a Simple Example of Stablecoin Arbitrage ⎊ Path

Provide a Simple Example of Stablecoin Arbitrage.

Assume a stablecoin is pegged to $1 but is trading at $0.98 on Exchange A. An arbitrageur buys 100 stablecoins for $98. They then use the protocol to redeem the 100 stablecoins for $100 worth of collateral (e.g.

ETH). The arbitrageur immediately sells the collateral for $100, making a $2 profit (minus fees).

This buying pressure on Exchange A pushes the price back toward $1.

How Do Arbitrageurs Exploit Price Differences between the Spot and Physically-Settled Futures Markets?

How Does the Concept of “Energy per Transaction” Differ between PoW Systems and Centralized Payment Networks?

How Does the Redemption Mechanism Support a Stablecoin’s Peg during High Demand?

What Are LP Tokens and What Is Their Primary Function?

Provide a Simple Code Example of a Function Following the CEI Pattern

How Do Centralized Exchanges Generate Revenue from Their Market Making Activities?

How Do “Sandwich Attacks” Differ from Simple Front-Running?

In a Seigniorage Model, What Incentivizes Users to Buy Bonds When the Stablecoin Is below Its Peg?