Ok, pardon my ignorance. As both a liquidity provider and shareholder I am willing to support increasing the spread, if there is a detailed plan I can agree with.
Volatility risks for liquidity providers may be somewhat lower and mildly offset by the spreads, but exchange default is still real. It is difficult to significantly reduce the interest rate, which is so far the most reasonable form of mitigation to exchange default. On the other hand, in terms of cutting costs, the increase in liquidity targets should be proportionate to the decrease of interests. There are conflicting objectives so it’s hard to decide upon a fair plan.
As a temporary fix, it is easier to support a change in the reward system in liquidity operations, partly to experiment the effects of a spread increase. For example, in NuPool the only way to bid for reward is to change your preferred interest rate. I think, once you reduce the desired interest rate, you should also be allowed to place orders at slightly higher spreads, which gives less volatility risk. We can see how the incentives of liquidity providers play out to support a higher spread and make it cheaper for shareholders.