Thinking along similar lines.
Much as I hate fees (and think crypto should generally be designed to remove them wherever possible) the Uniswap system uses the fees for balance:
- For liquidity providers: To compensate for the risk of impermanent loss.
- For arbitrage traders: As a charge against (largely) risk-free arbitrage profits.
Without the fees:
- The incentives would need to do the heavy lifting to compensate the liquidity providers. Which risks degrading the price of the incentives.
- The arbitrage traders (bots) make bank.
I think. At least on the typical X * Y = K liquidity system.
Posted Using LeoFinance Beta