Why Do Stablecoins Typically Have a Very Narrow Bid-Offer Spread? ⎊ Path

Why Do Stablecoins Typically Have a Very Narrow Bid-Offer Spread?

Stablecoins are pegged to a stable asset, usually a fiat currency like the US dollar, which reduces price volatility significantly. Their primary function as a medium of exchange and store of value encourages high trading volume and deep liquidity.

This combination of low volatility and high liquidity ensures that the bid and offer prices remain extremely close, resulting in a minimal spread.

Why Are Stablecoin Pools Less Susceptible to Significant Impermanent Loss?

What Is the Risk Profile of an Algorithmic Stablecoin versus a Fiat-Backed Stablecoin?

How Do Stablecoins Maintain Their Peg?

How Does the Bid-Offer Spread Relate to Market Liquidity in Cryptocurrency Exchanges?

Define the Term “De-Peg” in the Context of Stablecoins

How Does the Collateralization Ratio Affect the Stability and Spread of a Collateralized Stablecoin?

Why Is a Spread Deviation from the Peg a Concern for Stablecoin Holders?

What Are the Three Main Types of Stablecoins (Fiat-Backed, Crypto-Backed, Algorithmic)?