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What Role Do Transaction Fees Play in Determining the Profitability of an Arbitrage Trade?

Fees are a direct cost; the arbitrage profit must be greater than the transaction fees for the trade to be viable.
Greeks.Live20.11.25Greeks.Live20.11.25

What Role Do Transaction Fees Play in Determining the Profitability of an Arbitrage Trade?

Transaction fees, including gas costs on the blockchain, are a direct cost to the arbitrageur. The potential profit from the price discrepancy must exceed the total transaction fees for the trade to be profitable.

High gas fees can effectively eliminate small arbitrage opportunities, leaving only larger price differences worthwhile to exploit.

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What Role Do Transaction Fees Play in Determining the Profitability of an Arbitrage Trade?

Transaction fees, including gas costs on the blockchain, are a direct cost to the arbitrageur. The potential profit from the price discrepancy must exceed the total transaction fees for the trade to be profitable.

High gas fees can effectively eliminate small arbitrage opportunities, leaving only larger price differences worthwhile to exploit.

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