I scratch my head trying to understand how Balancer incentivise traders to arbitrage index funds - and paying a fee to LPs. I understand what index funds are and what are the benefits for LPs. However, when it comes to arbitragers I don’t get it.
This article gives a short description of the process but I must be dumb because I still don’t understand what incentivise traders to do arbitrage with fees that can range between 0.0001% and 10%.
Could you please give an example or ELI5 ?