How does arbitrage work?

As they buy and sell, the price differences between identical or similar assets narrow. The lower-priced assets are bid up, while the higher-priced assets are sold off. In this manner, arbitrage resolves inefficiencies in the market’s pricing and adds liquidity to the market.

How does a stablecoin contract?

In the second case, the contraction in the supply of a stablecoin takes place by incentivizing users to exchange their stablecoins in favor of interest-bearing coupons or bond tokens, which will pay in periods of supply expansion when the price is above the peg.

What is triangular arbitrage?

Triangular arbitrage: This is the process of moving funds between three or more digital assets on a single exchange to capitalize on the price discrepancy of one or two cryptocurrencies. For example, a trader can create a trading loop that starts with bitcoin and ends with bitcoin.

What is crypto arbitrage trading?

Wooden blocks with the word Risk. Crypto arbitrage trading is a great option for investors looking to make high-frequency trades with very low-risk returns. Crypto arbitrage trading is a type of trading strategy where investors capitalize on slight price discrepancies of a digital asset across multiple markets or exchanges.