Got it, but let me push back a bit.
If the math doesn’t really justify V∗∝(Vc)LV^* \propto (V_c)^LV∗∝(Vc)L, then IL isn’t truly “eliminated,” it’s transformed. In a low-volume or low-fee environment, the rebalancing costs can exceed fee income, which means the position will draw down relative to just HODL’ing.
So my question is: in those adverse conditions, where exactly does the model protect LPs from losses? Because unless the fee stream always covers the rebalance drag, it feels like IL risk is still there, just hidden under different assumptions.
Appreciate the dialogue.