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

**Published:** 2025-12-05
**Author:** Greeks.live
**Categories:** Path

---

## 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.

- [How Does the Cost of Transaction Fees Affect the Profitability of Delta-Neutral Hedging?](https://learn.greeks.live/path/how-does-the-cost-of-transaction-fees-affect-the-profitability-of-delta-neutral-hedging/)

- [How Does the Fee Tier (E.g. 0.3% Vs 0.05%) of a Pool Affect the Net Profitability against IL?](https://learn.greeks.live/path/how-does-the-fee-tier-e-g-0-3-vs-0-05-of-a-pool-affect-the-net-profitability-against-il/)

- [How Does Transaction Latency Affect the Profitability of High-Frequency Spot-Futures Arbitrage?](https://learn.greeks.live/path/how-does-transaction-latency-affect-the-profitability-of-high-frequency-spot-futures-arbitrage/)

- [How Do Promotional 0% Fee Periods Impact the Pool Operator’s Short-Term Profitability?](https://learn.greeks.live/path/how-do-promotional-0-fee-periods-impact-the-pool-operators-short-term-profitability/)

- [How Does the Availability of Lending/borrowing for the Spot Asset Affect the Profitability of the Carry Trade?](https://learn.greeks.live/path/how-does-the-availability-of-lending-borrowing-for-the-spot-asset-affect-the-profitability-of-the-carry-trade/)

- [How Does a DEX Determine the Optimal Price Deviation Threshold for a “Push” Update?](https://learn.greeks.live/path/how-does-a-dex-determine-the-optimal-price-deviation-threshold-for-a-push-update/)

- [Does a Pool’s Minimum Payout Threshold Differ Significantly between PPS and PROP?](https://learn.greeks.live/path/does-a-pools-minimum-payout-threshold-differ-significantly-between-pps-and-prop/)

- [How Does a Higher Trading Volume Impact the Profitability of a Liquidity Pool?](https://learn.greeks.live/path/how-does-a-higher-trading-volume-impact-the-profitability-of-a-liquidity-pool/)

## Glossar

### [Trading Volume](https://learn.greeks.live/area/trading-volume/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Liquidity ⎊ ⎊ Trading volume represents the total quantity of an asset ⎊ cryptocurrency, options contracts, or financial derivatives ⎊ bought and sold within a given timeframe, typically expressed in units or notional value.

### [Profitability Threshold](https://learn.greeks.live/area/profitability-threshold/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Level ⎊ Profitability Threshold is the minimum return level, often defined by the initial premium collected minus transaction costs, that a derivative position must exceed to be considered successful.

### [Governance Vote](https://learn.greeks.live/area/governance-vote/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Decision ⎊ A governance vote represents the formal, on-chain decision-making process utilized by decentralized autonomous organizations (DAOs) that manage cryptocurrency protocols, including derivative platforms and liquidity pools.

### [Fee Structure](https://learn.greeks.live/area/fee-structure/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Allocation ⎊ Fee structures within cryptocurrency, options trading, and financial derivatives represent the systematic distribution of costs associated with executing and maintaining positions, impacting net profitability and strategic decision-making.

### [Arbitrage](https://learn.greeks.live/area/arbitrage/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Exploitation ⎊ Arbitrage, within cryptocurrency, options, and derivatives, represents the simultaneous purchase and sale of an asset in different markets to capitalize on transient price discrepancies, effectively a risk-free profit opportunity.

## Discover More

### [What Is the Difference between Pure Arbitrage and Statistical Arbitrage?](https://learn.greeks.live/path/what-is-the-difference-between-pure-arbitrage-and-statistical-arbitrage/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Difference between Pure Arbitrage and Statistical Arbitrage?](https://learn.greeks.live/wp-content/uploads/2025/10/Metallic-Actuator-Interface-Above-Cryptocurrency-Ledger-Microcontroller-Circuitry-Proximity.webp)

Pure arbitrage is risk-free profit from momentary price differences; statistical arbitrage is low-risk, relying on mean reversion of correlated assets.

### [How Is the Calculation of VWAP Affected by 'Off-Exchange' or Dark Pool Volume?](https://learn.greeks.live/path/how-is-the-calculation-of-vwap-affected-by-off-exchange-or-dark-pool-volume/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Is the Calculation of VWAP Affected by 'Off-Exchange' or Dark Pool Volume?](https://learn.greeks.live/wp-content/uploads/2025/10/Segmented-Modular-Tokenization-Curve-Representing-Volatility-Surface-Contraction-in-Decentralized-Finance-Options.webp)

Excluding dark pool or OTC volume skews the VWAP, making it unrepresentative of the total market's average execution price for that period.

### [What Happens to Low-Fee Transactions during Peak Network Usage?](https://learn.greeks.live/path/what-happens-to-low-fee-transactions-during-peak-network-usage/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Happens to Low-Fee Transactions during Peak Network Usage?](https://learn.greeks.live/wp-content/uploads/2025/10/Precision-Engineering-Mechanics-Interfacing-Cryptocurrency-Derivatives-Settlement-Infrastructure-Physicalization.webp)

Back Queue. uparrow Time Hours/Days. Drop checkmark.

### [How Does a 'Zero-Fee' Pool Manage Its Operational Costs?](https://learn.greeks.live/path/how-does-a-zero-fee-pool-manage-its-operational-costs/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does a 'Zero-Fee' Pool Manage Its Operational Costs?](https://learn.greeks.live/wp-content/uploads/2025/10/Cross-Sectional-Examination-of-Mechanism-Governing-Decentralized-Autonomous-Organization-Governance-Protocol-Execution.webp)

By using internal self-mining, collecting transaction fees/MEV, or being subsidized as a loss leader for market share.

### [What Is the Impact of Low Volatility on Divergence Loss in a Stablecoin Pool?](https://learn.greeks.live/path/what-is-the-impact-of-low-volatility-on-divergence-loss-in-a-stablecoin-pool/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Impact of Low Volatility on Divergence Loss in a Stablecoin Pool?](https://learn.greeks.live/wp-content/uploads/2025/10/Crystalline-Delta-Hedging-Structures-Approaching-Lunar-Settlement-Infrastructure-High-Frequency-Trading-Protocols.webp)

Low volatility in stablecoin pools results in minimal or near-zero divergence loss, allowing LPs to safely use very narrow, high-fee-earning ranges.

### [How Does Open Interest Differ from Trading Volume?](https://learn.greeks.live/path/how-does-open-interest-differ-from-trading-volume/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does Open Interest Differ from Trading Volume?](https://learn.greeks.live/wp-content/uploads/2025/10/Stochastic-Oscillator-Implied-Volatility-Surface-Mapping-Decentralized-Finance-Protocol-Mechanisms.webp)

Volume is the number of contracts traded over a period (activity); open interest is the total number of outstanding contracts (commitment).

### [How Does a Low-Volume Period Affect the Calculation of TWAP versus VWAP?](https://learn.greeks.live/path/how-does-a-low-volume-period-affect-the-calculation-of-twap-versus-vwap/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does a Low-Volume Period Affect the Calculation of TWAP versus VWAP?](https://learn.greeks.live/wp-content/uploads/2025/10/Precision-Engineered-Cryptocurrency-Asset-Apex-Representing-Volatility-Surface-Skew-Configuration.webp)

Low volume barely affects TWAP's time-average but can significantly skew VWAP due to volume-weighting.

### [Why Are Low-Cap Altcoins More Susceptible to Extreme Spread Widening during Market Stress?](https://learn.greeks.live/path/why-are-low-cap-altcoins-more-susceptible-to-extreme-spread-widening-during-market-stress/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Why Are Low-Cap Altcoins More Susceptible to Extreme Spread Widening during Market Stress?](https://learn.greeks.live/wp-content/uploads/2025/10/Asymmetrical-Digital-Asset-Volatility-Topology-Intersecting-Perpetual-Swaps-Grids.webp)

Low-cap altcoins have shallow order books; stress causes liquidity withdrawal, leading to massive price moves and spread widening.

### [What Are the Differences between Spatial Arbitrage and Temporal Arbitrage in the Context of Cryptocurrency Markets?](https://learn.greeks.live/path/what-are-the-differences-between-spatial-arbitrage-and-temporal-arbitrage-in-the-context-of-cryptocurrency-markets/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Are the Differences between Spatial Arbitrage and Temporal Arbitrage in the Context of Cryptocurrency Markets?](https://learn.greeks.live/wp-content/uploads/2025/10/Symmetric-Quadrant-Deployment-Mechanism-Illustrating-Decentralized-Autonomous-Organization-Governance-Structure.webp)

Spatial arbitrage is exploiting price differences across exchanges; temporal arbitrage is exploiting price differences over time.

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