Looped LMs are parameter efficient and promise dynamic computation (saving memory and FLOPs on easy tokens). However, state-of-the-art open Looped LMs trained with this dynamic computation capability (Ouro models) do not realize it in practice as each loop iteration (depth) requires its own level of KV-cache, necessitating all loop computations. Moreover, Ouro's early-exit prior is enforced on each token equally, which results in static lower-depth like processing of all tokens regardless of difficulty. In this work, we propose a simple "best-available" KV caching strategy that works out-of-the-box, creating a new frontier in the performance vs depth space. Our approach enables up to 30% reduction in FLOPs and KV memory while retaining full-depth performance, showing the true flexibility of Looped LMs. Furthermore, training looped LMs with awareness about this KV caching strategy improves performance and efficiency. Finally, we apply a small but effective fix to the early-exit prior enforcement objective that makes tokens exit at truly heterogeneous depths based on effort. Our findings are validated on Ouro models as well as smaller looped LMs pre-trained from scratch.

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