How Does Stablecoin Liquidity Impact DeFi Protocols?

billla

Member
Stablecoin liquidity plays a crucial role in the functionality and efficiency of decentralized finance (DeFi) protocols. High liquidity allows for seamless transactions, stable trading pairs, and effective lending and borrowing practices, which can enhance user experience and attract more participants. However, how dependent are DeFi protocols on stablecoin liquidity for their overall success, and what happens when liquidity fluctuates?
 
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