Claude Code uses prompt caching (code.claude.com)

Claude Code has introduced a significant improvement with the implementation of prompt caching, enhancing both speed and cost efficiency. This feature allows the API to reuse previously processed information rather than reprocessing the entire conversation history for each turn. Prompt caching automatically manages what gets reused, though certain actions can invalidate the cache, necessitating a new computation that can slow down the next response. Understanding the mechanics of prompt caching, including the structure of request layers and cache management, is crucial for users to optimize their experience and costs effectively. The technical details highlight that cached entries are organized strategically, with the most stable content prioritized to minimize processing time. Changes to critical elements, such as the model or effort level, trigger a cache invalidation, requiring users to be mindful of these factors during use. Furthermore, where the cache resides depends on the authentication method, influencing how users can access and benefit from the caching capabilities. This innovation stands to boost productivity within the AI/ML community by making interactions with Claude Code more efficient and economically viable, ultimately enhancing the development and deployment of AI applications.