Fee war is hurting stableswap.

As competition for order flow intensifies, dexs are lowering the fee to capture more volume.

However, this also attract a ton of toxic swaps (MEV) because the exeuction costs drop (Fee compression).

In the past 6 months, stableswap's share of sandwich attacks over all pair has been rising drastically (Up to 54% this month and it's on ETH).

61% and 80% of stableswap volume on Maverick and Uni v4 are affected by toxic swap (MEV) when the pair is running in an ultra low fee environment, 0.001%.

One possible solution might be dynamic fee (E.g., @0xfluid) which is surprisingly good at stopping toxic flow (4.7% vs Uni v4 80%)

Because when the peg moves away from 1, fees increase and leaving less room for price exploit.

Another solution comes from @BarterDeFi, switching from constant product (X*Y=K) to constant sum (X+Y =K ? ) to eliminate toxic flow while giving good yields.

https://t.co/Lu4AcH11pa

As more stablecoin coming into blockchain, the toxic swap is a problem that all stableswap (Especially ETH) have to think about. Incentive only works for short but not for long term.

Good rate for swapper + Good yield for LP is how we keep the whale to go de-bank and swap on-chain.

* Credit @BarterDeFi and it's dashboard. If i have misread anything please let me know in the comment .