Glossary
Loss-Versus-Rebalancing (LVR)
The value an automated market maker's liquidity providers continuously lose to arbitrageurs trading against stale on-chain prices, measured against a rebalancing benchmark.
LVR (pronounced "lever") measures the money AMM liquidity providers lose to arbitrageurs. Every time an asset's price moves on a faster venue, arbitrageurs trade against the stale AMM price and pocket the difference. LVR isolates that cost as the gap between the LP's position and a strategy that continuously rebalances the same holdings at the true market price.
Unlike impermanent loss, LVR is a running cost that accrues even if prices later revert. It has become a key benchmark for evaluating AMM designs and motivates mechanisms like frequent batch auctions, oracle-based pricing, and MEV-capturing hooks that aim to return this value to LPs.