Overview
Thariq Shihipar explains how Claude Code uses prompt caching to enable long-running AI agents. Prompt caching dramatically reduces costs and latency by reusing computation from previous interactions, making complex agentic products economically viable.
Key Points
- Prompt caching enables long-running AI agents by reusing computation from previous interactions - making complex agentic products economically feasible
- Claude Code’s entire architecture is built around prompt caching - they monitor cache hit rates as a critical business metric
- High cache hit rates reduce operational costs significantly - allowing companies to offer more generous rate limits to users
- Teams treat prompt cache performance as mission-critical infrastructure - declaring SEVs when hit rates drop too low