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I added a Volume group in Proxmox VE as Storage for KVM VMs. A new Logical Volume will be created for each VM, but in Proxmox VE under The Defined Storage which shows list of created Logical Volumes I see my Logical Volume marked as RAW format. Is this a RAW image or a Logical Volume (LVM)?

But my main question, Does this really avoid the overhead of going through the filesystem layer on the host system ?

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In this case, "RAW format" means that it's a bit-by-bit image of what your VM will see as a disk, without any extra information, headers, metadata, or anything else. A RAW format disk may be stored in a file, but it can also be directly in a block device. You might call it an "image" in both cases, although it's more common to call it an "image" when it's in a file.

In your case, the answer is yes: the disk is backed by a LVM volume, which qemu sees as a block device, and the overhead is certainly much lower than what you would have by going through the filesystem layer.

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