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How Does a Low-Fee Pool Attract More Arbitrage Volume?

Low fees reduce the cost of arbitrage, lowering the profitability threshold and increasing the frequency and volume of arbitrage trades.
Greeks.Live21.11.25

How Does a Low-Fee Pool Attract More Arbitrage Volume?

Arbitrageurs are seeking risk-free profit, which is calculated as the price difference minus all costs, including the pool's transaction fee. A lower fee tier reduces the cost component, lowering the profitability threshold for an arbitrage trade.

This means smaller price imbalances become profitable, leading to more frequent arbitrage activity and thus higher overall trading volume in the low-fee pool.

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