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How Do High Fees Affect the Viability of Arbitrage Strategies in DeFi?

High fees reduce arbitrage profit margins, making small opportunities non-viable and creating a barrier for smaller, less capitalized traders.
Greeks.Live18.11.25

How Do High Fees Affect the Viability of Arbitrage Strategies in DeFi?

Arbitrage in DeFi involves profiting from price differences across various decentralized exchanges (DEXs) or protocols. High transaction fees erode the profit margin of these strategies.

If the fee required to execute the buy and sell transactions exceeds the price difference, the arbitrage opportunity becomes non-viable. This effect primarily limits smaller arbitrageurs, favoring high-frequency traders who can execute large, high-value trades.

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