Bridging the Gap Between Latent and Explicit Reasoning with Looped Transformers

Paper · arXiv 2606.31779 · Published June 30, 2026
Cognitive Models and Latent Representations

Language models typically reason via explicit chain-of-thought (CoT), generating intermediate steps token-by-token. Latent CoT offers an alternative: it performs multi-step reasoning in the model’s hidden states, replacing decoded tokens with continuous representations for greater efficiency. However, existing latent CoT methods underperform explicit CoT beyond 1B parameters, and the gap widens with scale. Looped, or recurrent-depth, Transformers, which reuse their weights to increase computation depth without adding parameters, are a natural fit for latent reasoning. We therefore ask whether looped Transformers can bridge this gap. We answer affirmatively with a simple recipe: a looped padded Transformer that processes K latent blocks in parallel for R iterations, with a cross-entropy loss on each latent position’s gold CoT-step token, similar to explicit CoT supervision. We instantiate it as LOTUS (Looped Transformers with parallel supervision on latents). LOTUS is, to our knowledge, the first latent-CoT method to bridge the gap to explicit CoT at the 3B scale, while cutting thought-phase latency by 2.5ˆ– 6.9ˆ from compact math expressions to natural language.

Introduction. Scaling inference compute, i.e., letting a model “think” before it answers, has become a dominant lever for increasing language model capabilities, with stronger performance now coming from longer reasoning chains rather than from model size alone [DeepSeek-AI, 2025, OpenAI, 2026]. Chain-ofthought (CoT) reasoning [Wei et al., 2022], where the model emits intermediate reasoning steps, drives this trend. However, since each token must be decoded sequentially, generating a CoT of length N takes N sequential model evaluations, making reasoning costly. Latent reasoning aims to achieve the same at a fraction of the cost: it carries out the intermediate computation in continuous hidden states rather than decoded tokens, condensing many steps into fewer model evaluations. On small backbones such as GPT-2 [Radford et al.], latent methods [Hao et al., 2025, Shen et al., 2025, Wei et al., 2025] already match CoT accuracy.

Discussion / Conclusion. We introduce LOTUS, showing that latent reasoning can approach the performance of explicit CoT by supervising a looped padded Transformer in parallel against the gold CoT tokens under the simple cross-entropy objective. On LLAMA-3.2-3B-INSTRUCT, LOTUS bridges the in-domain gap to explicit CoT on GSM8K, surpasses CoT on the out-of-domain average, and cuts thought-phase latency by 2.5ˆ. Ablations show the looped backbone, parallel gold CoT supervision, and sufficient block width and loop depth are each necessary. The latent representation analysis further shows the latents are transparent: the gold CoT is recoverable from them by a direct readout, they place graded probability on unseen but valid reasoning chains rather than a single memorized trace, and the step and answer losses contribute complementary structure. Limitations. We follow prior latent reasoning work [Hao et al., 2025, Shen et al., 2025, Wei et al., 2025] and evaluate on math benchmarks. Whether the recipe transfers to other domains remains an open direction for future work.

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Does reinforcement learning teach reasoning or just when to reason? How do training priors constrain what context information can override? How do training data properties shape reasoning capability development? Do base models contain latent reasoning that training can unlock? Why do continual learning scenarios trigger catastrophic forgetting and interference? What capability tradeoffs emerge when scaling model reasoning abilities? Do language models learn genuine linguistic structure or just surface patterns? How do neural networks separate factual knowledge from reasoning abilities? When does architectural design matter more than raw model capacity? Can model routing outperform monolithic scaling as an efficiency strategy? How does latent reasoning compare to verbalized chain-of-thought? Do autonomous architecture discoveries follow predictable scaling laws? How does example difficulty affect learning efficiency in language models? Can inference-time compute substitute for scaling up model parameters? Does parallel reasoning outperform sequential thinking under fixed compute budgets? What structural advantages do diffusion language models offer over autoregressive methods?