  This paper presents the results of a comprehensive empirical study of losses
to arbitrageurs (following the formalization of loss-versus-rebalancing by
[Milionis et al., 2022]) incurred by liquidity providers on automated market
makers (AMMs). We show that those losses exceed the fees earned by liquidity
providers across many of the largest AMM liquidity pools (on Uniswap).
Remarkably, we also find that the Uniswap v2 pools are more profitable for
passive LPs than their Uniswap v3 counterparts. We also investigate how
arbitrage losses change with block times. As expected, arbitrage losses
decrease when block production is faster. However, the rate of the decline
varies significantly across different trading pairs. For instance, when
comparing 100ms block times to Ethereum's current 12-second block times, the
decrease in losses to arbitrageurs ranges between 20% to 70%, depending on the
specific trading pair.
