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RE: RE: Arbitrage: Where does the Value come from?

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khal
@khaleelkazi
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1 min read

Taking the bHBD-BUSD pool as an example: the price always reverts to $1.

If it goes lower than $1 temporarily, it will go back up

Higher, it will go back down.

All of that volatility simply leads to arb and trading fees collected both by the protocol and by LPs. Impossible to lose money unless you enter the LP at $1 and exit at $0.90 in the moments before it is arb’ed and rebalanced. Since bHBD is always redeemable for HBD, the price always reverts back to $1 along with HBD returning to its peg.

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