Robinhood Chain's Sky-High Gas Makes LP a Better Play

Original author: 0xLonglife

The Robinhood Chain trenches remain hot. Data shows that in the two months since launch, Robinhood Chain has processed 463 million transactions, with 12.08 million active wallets, a cumulative DEX volume of $52 billion, and nearly 594,000 on-chain meme coin trading pairs.

Fees are the most honest sentiment indicator for a chain: cumulative gas on Robinhood Chain has reached 4,274 ETH; DefiLlama data shows that Robinhood Chain's daily gas fees rose from about $56,000 on Aug. 23 to about $3.75 million on Sept. 1. The revenue comes first from higher trading volume, and second from the fact that this chain is not cheap—the community has started complaining that "transaction fees are getting more expensive," with some even saying fees exceed Ethereum mainnet.

High transaction fees are certainly bad for traders, but from another angle, is LP—the favorite of DeFi Summer farmers six years ago—a better deal?

So we want to see whether, in this fee environment, it's more cost-effective to keep fighting in the trenches PvP or to pick quality pools and provide LP.

Why are fees so expensive?

Robinhood Chain is an Arbitrum-based L2, and fees consist of two parts:

L2 execution fee: on-chain execution fee;

L1 data fee: the cost of posting transaction data to Ethereum for data availability.

Official docs state that the L1 data fee varies with Ethereum congestion and calldata size. Therefore, simple transfers and complex swap/launchpad transactions are not in the same cost tier. Platforms like Pons and long.xyz generate more calldata and contract calls, and gas is only the first layer of cost. It can be said that token launch platforms act as amplifiers of user fee expenditure.

Take Pons as an example: Pons charges 0.0005 ETH for token creation, 1% for V1 swaps; V2 default curve fee is 1%, creator tax can be up to 10%, and after token graduation, Uniswap v4 hooks can continue to charge 1%. Fees go to the protocol, creator, Pons buyback and burn, meme token buyback and burn, Uniswap/LP, etc. Even Pons admitted in a post yesterday that it was the on-chain launchpad where users paid the highest fees in the past 24 hours.

Therefore, Robinhood Chain's high costs come from three layers: on-chain gas, token trading taxes, miscellaneous fees, and the repeated failure costs in high-frequency PvP.

Take microduck as an example. Suppose a user buys this token with $1,000 worth of ETH. The aggregator's trading path should be: WETH--USDG--NVDA--microduck. Under this path, each step is calculated using the most commonly used pool, and the user will pay over $20 in transaction costs at the buy stage, mainly from Pons V2 hook fees and creator taxes (1% each).

Similarly, if microduck rises 50% and is sold, the transaction cost exceeds $30. Ultimately, a trade with a paper gain of 50% would have a theoretical profit of $500, but the actual profit is $437.30, with transaction costs of about $62.70.

Thus, an investor who finally catches a winning meme coin has 12.54% of their profit taken by trading intermediaries.

Actual win rate in trench PvP

Many think the trenches are an information asymmetry game. But as fees rise, it becomes more of a cost-control game.

Dune data shows: over the past 30 days, among traders who sold memecoins on Robinhood Chain:

Profitable addresses: 479,514;

Losing addresses: 716,383;

Loss ratio: about 59.9%;

Honestly, this profit/loss ratio is already decent in a market that hasn't fully turned bullish yet. But the current data includes the first 50 days of Robinhood Chain's easy mode. Now that capital is flooding into RH chain, community feedback says trench difficulty has entered hell mode, and foreign Twitter accounts complain daily about being rugged. The profit/loss address ratio is likely to worsen further.

Moreover, persistently high on-chain fees exacerbate a PvP paradox: the higher the fees, the higher the win rate needed for small accounts to be profitable; the heavier the taxes, the larger the price increase needed for short-term trades. Ultimately, the trenches are not without opportunity, but they require you to be earlier, faster, and more accurate than most, while also paying ever-increasing friction costs. Over time, the more expensive the fees, the harder it is for low-win-rate speculative strategies to outperform in the long run.

Candidate pools for LP

Thus, the cost-effectiveness of finding quality LP pools becomes increasingly apparent. Because PvP earns money from your counterparty, while LP earns money from the trading activity itself.

Based on the current RH chain narrative around stock-meme coins and Robinhood Chain pool data, the editor has selected a few pools worth watching:

Here we need to explain the data: most tokens launched on platforms like Pons are stock tokens, and most users do not hold large amounts of them. Therefore, during trading, the routing takes an extra step, and that extra step is where we earn excess returns.

It should be noted that UP is a native ve(3,3) protocol on RH chain. The AAPL/USDG and WETH/USDG APRs look very high, but TVL is relatively small, and the sustainability of returns needs further observation.

Of course, another approach is to choose promising RH chain infrastructure projects for long-term holding and LP provision. Investors are advised to focus on projects with delivered products and native RH chain protocols. For example, the aforementioned ve(3,3) protocol Up has benefited from the recent rapid increase in token valuation. Its token is currently paired with WETH on the platform, with an APR as high as 21,950%.

In addition, OHM-like (OlympusDAO) protocol NET, the officially recognized stock dividend protocol Index, and the native order book DEX Mancer on RH chain—these projects, barring any surprises, should perform well in the long term, with current maximum mainstream pool APRs of 2,341%, 1,261%, and 1,059% respectively.

Finally, some savvy on-chain degens take an "unorthodox approach": they exploit the high volatility of hot meme coins and LP scarcity by creating custom high-fee LPs on Uniswap V4, riding the on-chain FOMO sentiment to earn good returns. For example, the Rabbit token that briefly exploded yesterday: someone created a USDG pool with an 8% fee rate. The pool had a TVL of $328,000, captured $239,000 in volume in 24 hours, and earned $19,000, achieving an APR of 2,124%. However, this is somewhat like another form of meme speculation, betting that the token won't quickly go to zero.

In summary, the operating strategy for Robinhood Chain under the new situation seems to need redefinition. In the low-fee era, the trenches could tolerate high-frequency trial and error; in the high-fee era, every click costs you. For ordinary users, the PvP win rate is only about 40%, and it is further eroded by gas, platform fees, slippage, and failed transactions. In contrast, selecting quality stock tokens or index tokens for LP essentially puts you on the fee-collecting side of trading flow.

The editor believes that in the current environment of rapidly rising Robinhood Chain fees, the more cost-effective approach is not indiscriminate trench fighting. Instead, use a small position for high-certainty narratives and the main position for LPs with high volume, stable prices, and not-too-thin TVL.

Trench trading profits from directional judgment amid chaos. LP profits from the chaos itself.