diff --git a/src/contracts/AbstractARM.sol b/src/contracts/AbstractARM.sol
index bd324220..d8a3fc6c 100644
--- a/src/contracts/AbstractARM.sol
+++ b/src/contracts/AbstractARM.sol
@@ -362,7 +362,7 @@ abstract contract AbstractARM is OwnableOperable, ERC20Upgradeable {
             // base input expressed in liquidity terms, multiply by buyPrice to get liquidity output.
             amountOut = convertedAmountIn * config.buyPrice / PRICE_SCALE;
 
-            _accrueSwapFee(config.buyPrice, amountOut);
+            _accrueSwapFee(config.buyPrice, config.crossPrice, amountOut);
             _ensureLiquidityAvailableForSwap(amountOut);
         }
 
@@ -405,7 +405,7 @@ abstract contract AbstractARM is OwnableOperable, ERC20Upgradeable {
             // Divide the exact liquidity output by buyPrice to solve for the required base input.
             amountIn = convertedAmountOut * PRICE_SCALE / config.buyPrice + 3;
 
-            _accrueSwapFee(config.buyPrice, amountOut);
+            _accrueSwapFee(config.buyPrice, config.crossPrice, amountOut);
             _ensureLiquidityAvailableForSwap(amountOut);
         }
 
@@ -486,12 +486,13 @@ abstract contract AbstractARM is OwnableOperable, ERC20Upgradeable {
         return IAssetAdapter(config.adapter).convertToShares(assets);
     }
 
-    /// @dev Accrue fees on discounted buy-side swaps using the executed base buy price.
+    /// @dev Accrue fees on discounted buy-side swaps using the recognized NAV gain.
     /// @param buyPrice Price the ARM paid for the base asset.
+    /// @param crossPrice Price used to value the base asset in totalAssets().
     /// @param amountOut Liquidity asset amount paid out by the ARM.
-    function _accrueSwapFee(uint256 buyPrice, uint256 amountOut) internal {
+    function _accrueSwapFee(uint256 buyPrice, uint256 crossPrice, uint256 amountOut) internal {
         uint256 feeMultiplier =
-            buyPrice == 0 ? 0 : (PRICE_SCALE - buyPrice) * uint256(fee) * PRICE_SCALE / (buyPrice * FEE_SCALE);
+            buyPrice == 0 ? 0 : (crossPrice - buyPrice) * uint256(fee) * PRICE_SCALE / (buyPrice * FEE_SCALE);
         feesAccrued = SafeCast.toUint128(feesAccrued + amountOut * feeMultiplier / PRICE_SCALE);
     }
 
diff --git a/test/fork/EthenaARM/SwapExactTokensForTokens.t.sol b/test/fork/EthenaARM/SwapExactTokensForTokens.t.sol
index e4a12ffb..ea3f6150 100644
--- a/test/fork/EthenaARM/SwapExactTokensForTokens.t.sol
+++ b/test/fork/EthenaARM/SwapExactTokensForTokens.t.sol
@@ -89,8 +89,8 @@ contract Fork_Concrete_EthenaARM_swapExactTokensForTokens_Test_ is Fork_Shared_T
         // Precompute expected amount out
         uint256 traderate = _buyPrice();
         uint256 expectedAmountOut = (susde.convertToAssets(AMOUNT_IN) * traderate) / 1e36;
-        uint256 expectedFee =
-            expectedAmountOut * _swapFeeMultiplier(_buyPrice(), ethenaARM.fee()) / ethenaARM.PRICE_SCALE();
+        uint256 expectedFee = expectedAmountOut * _swapFeeMultiplier(_buyPrice(), _crossPrice(), ethenaARM.fee())
+            / ethenaARM.PRICE_SCALE();
 
         // Expected events
         vm.expectEmit({emitter: address(susde)});
diff --git a/test/fork/EthenaARM/shared/Shared.sol b/test/fork/EthenaARM/shared/Shared.sol
index ab35f8ff..93a2c60e 100644
--- a/test/fork/EthenaARM/shared/Shared.sol
+++ b/test/fork/EthenaARM/shared/Shared.sol
@@ -119,10 +119,15 @@ abstract contract Fork_Shared_Test is Base_Test_ {
         sellPrice = sellPriceMem;
     }
 
-    function _swapFeeMultiplier(uint256 buyPrice, uint256 fee) internal view returns (uint256) {
+    function _crossPrice() internal view returns (uint256 crossPrice) {
+        (,,,, uint128 crossPriceMem,,,) = ethenaARM.baseAssetConfigs(address(susde));
+        crossPrice = crossPriceMem;
+    }
+
+    function _swapFeeMultiplier(uint256 buyPrice, uint256 crossPrice, uint256 fee) internal view returns (uint256) {
         uint256 priceScale = ethenaARM.PRICE_SCALE();
         if (buyPrice == 0 || fee == 0) return 0;
-        return (priceScale - buyPrice) * fee * priceScale / (buyPrice * ethenaARM.FEE_SCALE());
+        return (crossPrice - buyPrice) * fee * priceScale / (buyPrice * ethenaARM.FEE_SCALE());
     }
 
     function _ignite() internal virtual {
diff --git a/test/unit/OriginARM/CollectFees.sol b/test/unit/OriginARM/CollectFees.sol
index 1ccc679b..acd8aea9 100644
--- a/test/unit/OriginARM/CollectFees.sol
+++ b/test/unit/OriginARM/CollectFees.sol
@@ -13,7 +13,8 @@ contract Unit_Concrete_OriginARM_CollectFees_Test_ is Unit_Shared_Test {
         vm.stopPrank();
 
         amountIn = amounts[0];
-        expectedFee = amountOut * _swapFeeMultiplier(_buyPrice(), originARM.fee()) / originARM.PRICE_SCALE();
+        expectedFee =
+            amountOut * _swapFeeMultiplier(_buyPrice(), _crossPrice(), originARM.fee()) / originARM.PRICE_SCALE();
     }
 
     function test_RevertWhen_CollectFees_Because_InsufficientLiquidity() public deposit(alice, DEFAULT_AMOUNT) {
@@ -61,4 +62,34 @@ contract Unit_Concrete_OriginARM_CollectFees_Test_ is Unit_Shared_Test {
         // Ensure there nothing has been allocated
         assertEq(weth.balanceOf(feeCollector), collectorBalance + expectedFees, "Collector balance should change");
     }
+
+    function test_SwapFee_IsBoundedByCrossPriceNavGain() public {
+        uint256 crossPrice = 9998 * 1e32;
+        uint256 buyPrice = 9997 * 1e32;
+        uint256 amountIn = 100 ether;
+
+        vm.startPrank(governor);
+        originARM.setFee(originARM.FEE_SCALE() / 2);
+        originARM.setCrossPrice(address(oeth), crossPrice);
+        originARM.setPrices(address(oeth), buyPrice, crossPrice, type(uint128).max, type(uint128).max);
+        vm.stopPrank();
+
+        deal(address(weth), address(originARM), amountIn);
+        deal(address(oeth), bob, amountIn);
+        uint256 totalAssetsBefore = originARM.totalAssets();
+
+        vm.startPrank(bob);
+        oeth.approve(address(originARM), amountIn);
+        uint256[] memory amounts = originARM.swapExactTokensForTokens(oeth, weth, amountIn, 0, bob);
+        vm.stopPrank();
+
+        uint256 amountOut = amounts[1];
+        uint256 recognizedNavGain = amountOut * (crossPrice - buyPrice) / buyPrice;
+        uint256 expectedFee =
+            amountOut * _swapFeeMultiplier(buyPrice, crossPrice, originARM.fee()) / originARM.PRICE_SCALE();
+
+        assertEq(originARM.feesAccrued(), expectedFee, "Wrong bounded swap fee");
+        assertLe(originARM.feesAccrued(), recognizedNavGain, "Fee exceeds recognized NAV gain");
+        assertGe(originARM.totalAssets(), totalAssetsBefore, "Swap fee should not reduce total assets");
+    }
 }
diff --git a/test/unit/OriginARM/Setters.sol b/test/unit/OriginARM/Setters.sol
index 0b6b7f39..ccbc04b7 100644
--- a/test/unit/OriginARM/Setters.sol
+++ b/test/unit/OriginARM/Setters.sol
@@ -161,8 +161,8 @@ contract Unit_Concrete_OriginARM_Setters_Test_ is Unit_Shared_Test {
         originARM.setFee(newFee);
         assertEq(originARM.fee(), newFee, "Wrong fee");
         assertEq(
-            _swapFeeMultiplier(_buyPrice(), originARM.fee()),
-            _expectedSwapFeeMultiplier(_buyPrice(), newFee),
+            _swapFeeMultiplier(_buyPrice(), _crossPrice(), originARM.fee()),
+            _expectedSwapFeeMultiplier(_buyPrice(), _crossPrice(), newFee),
             "Wrong swap fee multiplier"
         );
         assertEq(weth.balanceOf(originARM.feeCollector()), feeCollectorBalanceBefore, "Wrong fee collector balance");
@@ -185,8 +185,8 @@ contract Unit_Concrete_OriginARM_Setters_Test_ is Unit_Shared_Test {
         originARM.setFee(newFee);
         assertEq(originARM.fee(), newFee, "Wrong fee");
         assertEq(
-            _swapFeeMultiplier(_buyPrice(), originARM.fee()),
-            _expectedSwapFeeMultiplier(_buyPrice(), newFee),
+            _swapFeeMultiplier(_buyPrice(), _crossPrice(), originARM.fee()),
+            _expectedSwapFeeMultiplier(_buyPrice(), _crossPrice(), newFee),
             "Wrong swap fee multiplier"
         );
         assertEq(weth.balanceOf(feeCollector), feeCollectorBalanceBefore + feeToCollect, "Wrong fee collector balance");
@@ -250,8 +250,8 @@ contract Unit_Concrete_OriginARM_Setters_Test_ is Unit_Shared_Test {
         assertEq(_buyLiquidityRemaining(), newBuyLiquidity, "Wrong buy liquidity");
         assertEq(_sellLiquidityRemaining(), newSellLiquidity, "Wrong sell liquidity");
         assertEq(
-            _swapFeeMultiplier(_buyPrice(), originARM.fee()),
-            _expectedSwapFeeMultiplier(newBuyPrice, originARM.fee()),
+            _swapFeeMultiplier(_buyPrice(), _crossPrice(), originARM.fee()),
+            _expectedSwapFeeMultiplier(newBuyPrice, _crossPrice(), originARM.fee()),
             "Wrong swap fee multiplier"
         );
     }
@@ -305,9 +305,13 @@ contract Unit_Concrete_OriginARM_Setters_Test_ is Unit_Shared_Test {
         assertEq(_crossPrice(), crossPrice + 1, "Wrong cross price");
     }
 
-    function _expectedSwapFeeMultiplier(uint256 buyT1, uint256 fee) internal view returns (uint256) {
+    function _expectedSwapFeeMultiplier(uint256 buyT1, uint256 crossPrice, uint256 fee)
+        internal
+        view
+        returns (uint256)
+    {
         uint256 priceScale = originARM.PRICE_SCALE();
         if (buyT1 == 0 || fee == 0) return 0;
-        return (priceScale - buyT1) * fee * priceScale / (buyT1 * originARM.FEE_SCALE());
+        return (crossPrice - buyT1) * fee * priceScale / (buyT1 * originARM.FEE_SCALE());
     }
 }
diff --git a/test/unit/shared/Shared.sol b/test/unit/shared/Shared.sol
index a09c0b25..bcf3c973 100644
--- a/test/unit/shared/Shared.sol
+++ b/test/unit/shared/Shared.sol
@@ -168,9 +168,9 @@ abstract contract Unit_Shared_Test is Base_Test_, Modifiers {
         crossPrice = crossPriceMem;
     }
 
-    function _swapFeeMultiplier(uint256 buyPrice, uint256 fee) internal view returns (uint256) {
+    function _swapFeeMultiplier(uint256 buyPrice, uint256 crossPrice, uint256 fee) internal view returns (uint256) {
         uint256 priceScale = originARM.PRICE_SCALE();
         if (buyPrice == 0 || fee == 0) return 0;
-        return (priceScale - buyPrice) * fee * priceScale / (buyPrice * originARM.FEE_SCALE());
+        return (crossPrice - buyPrice) * fee * priceScale / (buyPrice * originARM.FEE_SCALE());
     }
 }