Hey @ottodv, these are indeed important considerations and I am glad we can talk through them. I think you capture the POV of potential LPs really well, and this comment together with others from @stanislavkozlovski, @jonathanstrange and @Selby has been illuminating in terms of concerns regarding the peg that we as a team need to address in the plans we propose to the DAO.
First I agree that 0.3% tx fee seems to be best for now. 0.05% seems a bit low to make LPing interesting, and 1% seems too high for those trading.
I agree, that’s pretty much my opinion too.
Regarding sETH2, one motivation to buy them could be to not have to wait for activation, but get tokens that stake immediately. For this to be interesting the pool itself should only start rewarding new deposits once they have been activated (which is not the case right now), this additionally prevents the pool APR from dropping when there is a lot of ETH being newly deposited. This benefit stays even after the merge of the beaconchain with ETH1, when withdrawing becomes possible. It’s a way to jump the activation queue, that will always remain valuable. In theory this should make sETH2 slightly more valuable than ETH.
It’s a great point, and especially relevant now that the queue has grown (and is expected to remain long for a while, especially after the Merge). Intuitively, it is important to preserve the existing stakers’ APY (anecdotal evidence of some folks in our community worrying about the drag on APY confirms this too), and with an added benefit of helping the peg, it makes all the more sense. We intend to propose a change in the Pool activation queue parameters to the DAO, where the criteria for entering the queue will be tightened to lower the chance of APY dilution for the existing stakers. In turn, it should also benefit the sETH2 peg.
For rETH2 is seems to me that once the merge has happened, there is really no reason for the market to exist as it can be simply withdrawn. Until then, my thought was to make holding rETH2 rewarding by simply giving holders a reward paid in Swise that is equivalent the the staking APR of sETH2.
Agree with this - it remains in the pipeline as per the earlier proposal on the forum: rETH2 Staking Contract to Incentivize Choosing StakeWise. We also liked and considered your comment on there about removing the need to perform staking txs to become eligible for SWISE. Hence, the new rewards distribution system supports automatic accrual of SWISE to rETH2 holders - they would only need to claim it whenever they’re ready to. We will reactivate the discussion about this as the next step after enabling the time-locking of SWISE. Until then, the people who read the forum are privy to the alpha that is the benefit of accumulating rETH2 early on 
It might even be better to just have an sETH2/rETH2 market (instead of sETH2/ETH). From a liquidity provider point of view, whether you have one or the other is equivalent in terms of APR. (While ETH itself doesn’t have a reward).
I agree that from the POV of an LP, holding one or the other would be profitable; however, this pool would need to exist only in addition to sETH2/ETH pool (because ability to exit into ETH is still needed). Still, it could perhaps replace the rETH2/ETH pool, as it would still create the opportunity to sell the rewards for ETH (albeit with a >0.6% discount) while offering the possibility to compound returns (via a direct swap into sETH2). Since I think that enabling compounding would be the main purpose of such a pool, the trading fee in it could be set to 0.05% instead of 0.3%, to not actually curtail the effect of compounding. What are your thoughts on this?
Coming back to the sETH2 market, that one could be sETH2/ETH, here we could apply the more traditional LP reward OR we could reward just the ETH part in the pool with a Swise reward and APR again equivalent the sETH2 staking reward (which the sETH2 part accrues). In this scenario again from a liquidity provider point of view it doesn’t matter which one you have, both return the same APR.
I think another way to describe the idea of rewarding just the ETH part of the pool with SWISE is to say that the farming APY should be at least half the staking APR, making the total yield at least as good as the staking APY. Still, as discussed with @stanislavkozlovski, we probably need to offer extra incentives to the potential LPs to make it a compelling proposition from the risk/reward perspective. I would appreciate hearing your thoughts on this.