Lossless Compression Strategies Can Cut LLM Context Window Costs in RAG Systems
Large Language Models using Retrieval-Augmented Generation (RAG) face significant cost and performance issues when context windows are overloaded with uncompressed data. Because transformer attention complexity scales quadratically with sequence length, doubling context size quadruples computational load, raising both latency and inference costs. LLMs also suffer from a 'lost in the middle' bias, where information placed centrally in a long context is frequently ignored or hallucinated. To address this, developers can apply lossless compression techniques such as semantic hashing, MinHash-based deduplication, and vector-based summarization to reduce token footprint without sacrificing information quality. A curated set of five densely compressed documents has been shown to outperform a bloated context of fifty raw chunks in RAG pipeline performance.
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