I stumbled on this thread (looking for something else actually) but it seems really useful for this discussion.
In particular, this post where a large pool provider lays out the rationale behind how pool trading fees are chosen.
It’s a long discussion that defies summarizing. Separate to that, I think the ultimate breakdown is this: higher ETH pool fees would make LPing in that pool more desirable, except that until LM rewards end our data is too dirty to rely on. A small (relative to LM) APY change from fees won’t tell us much about LP habits. Until LM stops we may not be able to know what’s correct in terms of drawing LPs.
Decreasing fees is hard because APYs are already bad, it may disrupt that pool’s economic ecosystem creating a downward spiral, and it will add to the “Bancor is completely propped up by LM” narrative. Increasing fees is hard since we already struggle to get traders and every little advantage helps. (Will traders even notice? Who can say?)
We can only learn what optimal fees are through testing, so it’s hard for me to argue against the proposed change because it’s a reasonable and small amount, and we have to start somewhere or else just admit we can’t try anything.