What will happen is that smart investors with bots will take a majority of the winnings when small fish are playing, and then will drop down to 0.25% when the whales play. Fucking the low-risk investors like mechs who will be stuck at 0.25%.
This is exactly the bot that I will be coding.
This is no different in principle from divesting when the whales play. It's not a new problem.
And really, switching between 1% and .25% is less of a problem than switching between 1% and 0%.