Geometric Mean Return

The geometric mean return is a measure of the average rate of return of an investment over multiple periods, accounting for the effects of compounding. Unlike the arithmetic mean, which simply averages the returns, the geometric mean provides a more accurate picture of the actual growth of a portfolio.

For leveraged tokens, the geometric mean return is typically lower than the arithmetic mean due to the drag caused by volatility and rebalancing costs. This is a critical metric for evaluating the long-term viability of a leveraged strategy.

It helps investors understand the impact of volatility on their capital over time. By focusing on the geometric mean, traders can better assess the true performance of their leveraged positions.