I think it’s fairly easy to extrapolate, based on the various iterations of trade economies in large ARPGs thusfar, how such an attempt would play out.
In fact, let’s do just that (I have attempted to in earlier comments):
Let’s go with your model: an actual buyout-listing marketplace, MMO-style, with only restrictions on what can be traded, but not how. In essence, you’re basically talking about D3’s AH but with the biggest chase items not being tradeable.
Let’s define that: let’s assume Exalted items are not tradeable, due to their immense power potential. Let’s also assume sufficient gold sinks via various options you and I both mentioned.
This paints the picture of items up to T20 being freely tradeable, and gold having a high value in helping obtain them. As these items drop fairly commonly in some form or fashion (a raw T20 with the right mods is very rare, but good T15s with room to improve are pretty common), and such an AH would offer a very easy and convenient way of simply dropping anything you find that you don’t need onto the market, the market would have a rather high supply rather quickly. Let’s remind ourselves here that T15-20 items with the right affixes for your build are already basically endgame gear. Exalted items are cherries on top that are fun to chase right now and have insane power potential - but you don’t need them to finish basically every bit of content in the game currently, except maybe for arena ladder pushing.
As we’re not in a bid-only or barter system, people do not need to interact much and can very easily and quickly obtain what they want. Follow a build guide’s loot filter/shopping list, sit on the AH for a bit, snipe a few items that have roughly what you want - boom, hey presto, your character is endgame viable. Result: 99% of what drops becomes utterly and completely uninteresting to you. The chance of finding upgrades to what you already have has diminished drastically, Exalted items aren’t tradeable so you’re at the mercy of drop luck to still progress. You’ve basically bypassed the lion’s share of enjoyable progression content in an ARPG to arrive at the “farm endlessly for tiny, tiny % of finding upgrades” portion of the game in as little time as possible - essentially, what D3 arrived at in both iterations of the game for drastically different reasons, and suffered immensely in retention and longevity because of it.
The situation you describe as ideal, with “80%” of progression being manageable through trade, would escalate to Trade cutting the core gameplay off at the knees, unless you place restrictions in form of harder access, or simply more “hassle” on Trade to prevent it from being far too efficient. And the more restrictions you place on it, the more pressing the question of “why have it at all” becomes. Bid-only? Annoying as hell. Barter? See PoE, it can be done better with more QoL but then we begin to run into the issues a full-blown AH poses again. Reduce the pool of tradeable items further? Why not go full SSF in that case.
I think D3 2.0 generally had the right idea, it just overshot the mark completely with empowering smart loot way, way too much and balancing around the expectation that your character would have your gear rather quickly. So instead of convenient Trade, it’s the smart loot itself being way too “fast” and getting your character to pre-determined, select few conditions of being “done” except for very, very rare upgrades which you must expect to “grind” endlessly for.
LE is currently in a place where loot feels generally exciting for a long time, and while Exalted items aren’t something you can expect to plan with for your current build, finding good ones for any build is a strong incentive to try new characters and make use of them. Which in my opinion is a very good spot for itemization to be in, and your proposed model of Trade would bypass a sizeable chunk of it and hyperfocus endgame itemization on Exalted items as the only remaining upgrade paths.
I think the few times EHG have discussed a bid-only Bazaar, it sounded like it would avoid most of these pitfalls, but in theory, at least, also sounded fairly roundabout and essentially pointless to have.
PS: I apologize for late replies, but the forum keeps telling me i’m on my first day and cannot post more often per hour, despite having been registered for a week or so.