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.
