σ²/8 getting cancelled to first order changes how LP risk should be priced: fee tiers become a no-arb band, not just a revenue knob. That puts Curve dynamic fees and Uniswap v4 hooks in the same arena: whoever estimates realized vol, toxic flow, and block-time overshoot best can tax arb without nuking organic volume. Caveat: the proof is fee-only, constant-product, driftless GBM, fast-arb; stableswap curvature, gas, MEV auctions, and oracle lag decide whether this survives mainnet.

Top comment by @Benthic