Question:
Decentralized exchanges operating liquidity pools do not allow for arbitrage.
Author: timothy NtambalaAnswer:
False. Arbitrageurs usually keep the exchange ratio a close reflection of current market prices of the underlying assets in liquidity pools. Therefore, arbitrage could be formed when trading between decentralized exchanges and liquidity pools. The DEX of a liquidity pool is simply a platform of liquidity in that scenario and is not aware of the market movements around that exchange.
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