Why Are Gas Fees a Critical Factor in Determining the Feasibility of Arbitrage Trades?

Gas fees are the cost of executing a transaction on a blockchain network. Arbitrage trades often have small profit margins, and if the gas fee is too high, the trade becomes unprofitable.

Arbitrageurs must also be willing to pay high gas fees to outbid competitors and ensure their transaction is included quickly (front-running), especially during periods of high network congestion. High gas fees effectively raise the minimum required price spread for an arbitrage opportunity to be worthwhile.