First off, it is not an arbitrage if you can't execute simultaneously. At best you've got a dirty hedge and more realistically a pair trade. Okay, off with the academic hat and on to CoinDesk, November 23:
This gap could create a "price dislocation" between on-chain and traditional markets, leading to potential losses or arbitrage opportunities.
What to know:
- The growing trend of real-world asset (RWA) tokenization may be overlooking a critical risk: the "weekend gap" between 24/7 crypto markets and traditional markets that are closed on weekends.
- This gap could create a "price dislocation" between on-chain and traditional markets, leading to potential losses or arbitrage opportunities.
- Oracle providers' weekend price feed freezes could exacerbate the issue, highlighting the need for more robust oracle architectures to manage the gap between open protocols and closed traditional markets.
As real-world asset (RWA) tokenization surges, the crypto industry is entering unfamiliar territory, bringing traditional equities, private credit, and commercial paper onchain and uncovering potential critical risks along the way.
Marcin Kaźmierczak, co-founder of oracle provider RedStone, says a risk is potentially being overlooked: the weekend gap, where crypto trades 24/7, while Wall Street does not.
In traditional finance, if disaster strikes a company over the weekend, the market is closed and then the stock "gaps down" when the opening bell rings on Monday. Meanwhile, in the crypto market, trading never stops. As more stocks are brought onchain, the gap in weekend trading on the blockchain for traditional equities versus when the market opens on Monday could pose a risk, according to Kaźmierczak....
....MUCH MORE
