Peg Monitor

Overview

This indicator measures the difference in price between one asset and other assets within a specific liquidity pool. The divergence could be either positive or negative, depending on whether the asset's price is higher or lower than other assets in the pool.

How can I use it?

The indicator determines the price of a specific asset in the pool and compares it to the price of other assets in the same pool. The divergence is the difference between these prices.

This indicator is useful in several ways for one, identifying potential arbitrage opportunities. If the price of an asset in one pool is significantly different from its price in another pool, traders may buy the asset in the pool where it is cheaper and sell it in the pool where it is more expensive to earn profits.

Furthermore, this indicator also helps users track risks that come when dealing with assets that follow specific price pegs. Some of this risks are:

The most immediate risk is a loss of value. If an asset is supposed to be pegged to a certain value, and it departs from that value, it means holders of that asset are either losing or gaining money unexpectedly.

Lastly, In cases where the asset being depegged is used as collateral for loans or other DeFi protocols, a sudden depeg could result in under-collateralization, which could lead to forced liquidations and increased volatility in the market.