Stablecoin arbitrage is making money on the tiny price differences between coins that are all supposed to be worth exactly one dollar. USDT, USDC, DAI and the rest target $1.00, but at any given second they trade a hair above or below it - and that hair is not the same on every exchange. Most of the time the gap is a few hundredths of a percent and not worth touching. Occasionally the peg breaks: a stablecoin loses its anchor and trades at $0.97, $0.92, in the worst cases lower. That is a depeg, and it is where the real spreads and the real risk live at the same time. Below we cover what moves stable prices apart, what a depeg actually is, how a tradeable 0.3% spread differs from a false one, and how Finder surfaces these routes net of fees and with honest D/W.
Why a "dollar" isn't always a dollar
A stablecoin is only worth a dollar if you trust that you can redeem it for a dollar. That trust is never exactly 100%, and it is not the same across venues. So price drifts.
Three forces keep the price near a dollar but never glued to it:
- Redemption friction. The issuer promises 1 coin = $1, but redeeming takes time, a bank, KYC and a minimum size. Until you can actually pull the dollar, the market discounts the coin slightly.
- Where demand is. USDT is the dominant quote asset on most offshore venues, USDC dominates in US-regulated and DeFi contexts. Local supply and demand differ by exchange, so the same coin clears at a slightly different price.
- Reserve trust. What backs the coin (cash, T-bills, commercial paper, a bank that might fail) determines how confident the market is. The moment that confidence cracks, price moves first and questions come later.
The first two give you the everyday micro-spreads. The third gives you depegs.
USDT vs USDC: two dollars that disagree
The cleanest stablecoin spread is not one coin across two exchanges - it is two coins on the same exchange. A USDC/USDT pair is literally the market quoting one dollar in terms of another dollar. It should print 1.0000. It rarely does.
- On a calm day USDC/USDT trades in a band like 0.9995-1.0005. That 0.05% wobble is the market's live opinion on which dollar is "better" right now.
- The pair also exists across venues: USDC/USDT on exchange A versus exchange B. When one venue has heavy USDC inflow (a DeFi unwind, a fiat on-ramp) and another does not, the two quotes diverge.
- And the same single coin diverges across venues too: USDT/USD on a regulated exchange versus USDT priced on an offshore book can sit a few basis points apart because the redemption path differs.
The USDC/USDT pair is the single best instrument for reading stablecoin stress. When it leaves the 0.999-1.001 band and stays out, something real is happening to one of the two coins - that is your signal to look closer, not to fire blindly.
What a depeg actually is
A depeg is when a stablecoin stops trading near its peg and the market repriced the risk that the dollar behind it might not be there. The canonical case is USDC in March 2023. Circle disclosed that about $3.3B of USDC reserves were stuck at the collapsing Silicon Valley Bank. Over a weekend USDC fell to roughly $0.88 before the US guaranteed SVB deposits and the coin clawed back to $1 within days. For about 48 hours, "1 USDC" was worth 88 cents on the open market.
USDT has had its own wobbles - down to around $0.95 in 2018 on reserve-quality fears, and brief dips during the 2022 stress - but has repegged each time. The pattern is always the same: a sharp drop on fear, a band of extreme volatility, then either recovery (the asset was fine) or a slow bleed (it was not).
The thing to internalise: a depeg is not a discount, it is a question the market has not answered yet. Buying at $0.88 is only a bargain if the coin returns to $1. If it does not, $0.88 was the expensive entry.
How spreads open in a depeg window
A depeg does not move every venue at once. That lag is the entire opportunity - and the entire trap.
- Venue lag. A US-regulated exchange with direct issuer redemption holds the peg better than an offshore book with no redemption path. During the SVB weekend, the spread between "USDC where you can redeem" and "USDC where you cannot" blew out to several percent.
- Pair lag. USDC/USDT cracks before USDC/USD does, because traders dump the wobbling stable into the stable they still trust. The cross-pair leads the fiat pair.
- Liquidity asymmetry. As the price falls, bids on the buy side vanish. The 0.88 print is real but thin - the depth that existed at $1.00 is not there at $0.88. A spread that looks like 4% at the top of book is 1% by the time you fill real size.
This is why depeg arbitrage is asymmetric. The upside is capped (the coin can only go back to $1) while the downside is open (it can keep falling, the withdrawal can freeze, the venue can halt trading). You are picking up a known small gain in front of an unknown large loss.
In a live depeg, withdrawals and deposits for the affected stable are the first thing exchanges suspend. You can buy USDC at $0.92, watch it recover to $0.99, and still be unable to move it to the venue where you would sell. A depeg spread without an open D/W on both legs is not a trade, it is a position you cannot close.
Tradeable 0.3% vs a false spread
Most stablecoin "spreads" you see in a raw feed are noise. The skill is telling the 0.3% you can take from the 3% you cannot.
A tradeable stable spread usually looks like this:
- Modest size, real depth. 0.2-0.5%, holding for seconds not milliseconds, with enough on both books to fill your size without eating the gap.
- Both legs liquid and open. Deposit of the stable open on the sell venue, withdrawal open on the buy venue. No "great price" on a coin you cannot move.
- A reason that is not a stale quote. A genuine demand imbalance between USDC and USDT, not one exchange's feed lagging by two seconds.
A false stable spread usually looks like this:
- Huge number, no depth. 2-5% on a stablecoin almost always means one venue is mid-depeg or its quote is stale. The size that prints the headline is a few hundred dollars.
- A frozen leg. The cheap side has withdrawals suspended (that is often why it is cheap), so the route cannot close.
- A pair nobody trades. A wide USDC/USDT mark on a venue with no volume is a wish, not a price.
The rule of thumb: on stablecoins, a small spread that survives a depth and D/W check beats a large one that does not, every single time. The 3% headline is usually the market correctly pricing a coin you should not be buying.
Worked example: a clean USDC/USDT route
Take a normal day, no depeg - just the everyday USDC/USDT micro-spread between two venues. Capital is in USDC, both legs are liquid, withdrawals open. The point is to show how thin the real edge is once fees and the network are counted.
Start: 20,000 USDC on venue A (USDC/USDT pair quotes USDC at 0.997)
Step 1 — buy USDC: venue A, you acquire USDC at $0.997 with USDT
size 20,000 USDC, taker 0.1% −$20.00
Step 2 — transfer: USDC over a low-cost network to venue B
fee ~$0.30, USDC withdraw 🟢 / deposit 🟢
Step 3 — sell USDC: venue B, USDC/USDT bid 1.001
20,000 × 1.001 = 20,020 USDT
taker 0.1% −$20.02
──────────────────────────────────────────────────────────────
Gross peg gap: (1.001 − 0.997) / 0.997 ≈ 0.40%
Costs: $20.00 + $0.30 + $20.02 ≈ $40.32 (≈ 0.20%)
Result: ≈ +40 USDT net on 20,000, i.e. ~0.20% per turn.
Two takeaways. First, the gross gap was 0.4% and the net was half of that - on stablecoins, fees and network eat most of the headline, so size matters more than on volatile assets. Second, this only works because both D/W legs were open and depth held. The same layer-by-layer method (spread minus fees minus network, with a D/W and depth check) is worked through on a shared example in how to read a route.
FAQ - stablecoin arbitrage
What is stablecoin arbitrage in simple terms?
It is profiting from small price differences between coins that all target $1 - USDT, USDC, DAI - either across exchanges or between two stables on one exchange (the USDC/USDT pair). Most gaps are tiny, the big ones appear during a depeg.
What is a depeg?
A depeg is when a stablecoin stops trading at $1 because the market doubts the dollar behind it. The textbook case is USDC falling to about $0.88 in March 2023 when reserves were stuck at the failing Silicon Valley Bank. It repegged within days, but for ~48 hours one USDC was worth 88 cents.
Is buying a depegged stable at $0.90 free money?
No. The upside is capped at $1 and the downside is open - the coin can fall further, withdrawals can freeze, the venue can halt trading. You are taking a known small gain in front of an unknown large loss. Only the coins that actually repeg made it look easy in hindsight.
How do I tell a real stable spread from a false one?
A real one is modest (0.2-0.5%), holds for seconds, has depth on both books and open D/W on both legs. A false one is huge (2-5%), thin, and usually has a frozen withdrawal on the cheap side - which is often why it is cheap. On stablecoins, the small spread that passes a depth and D/W check beats the big one that does not.
Where do I see stablecoin spreads?
In the spread scanner: Finder quotes USDC/USDT pairs and the same stable across 20+ exchanges, and shows the spread already net of fees plus honest deposit/withdrawal statuses. A 3% number on a frozen leg is flagged, not celebrated.
Not financial advice. A stablecoin trading below $1 is the market pricing a real risk, not handing out a discount. A depeg can deepen, liquidity can vanish, and withdrawals freeze exactly when you need them. The everyday peg spread is thin enough that fees and network decide whether it exists at all. The decision to trade, and its consequences, are yours.
Read on: the spot mechanic underneath this is unpacked in spot arbitrage, and the pillar Crypto arbitrage guide ties the types together. Why a withdrawal is sometimes closed - withdrawal windows and fees. The stable-as-collateral side of the trade - funding arbitrage. The mistakes that turn a 3% headline into a loss - arbitrage mistakes. Filtering live spreads down to the tradeable ones - the spread screener. Live stablecoin routes - in the web dashboard.