The File Compression settings are accessed from Performance | Settings.
In order to maintain that Cached files improve overall performance, compression settings should be defined. These settings determine which files should be compressed. The mode of compression is GZIP format - if the browser supports this format (If not, the data will be transferred unzipped).
To define compression settings:
Go to: Performance | Settings and go to the File Compression section of the settings screen. Select the file compression option that reflects your requirements.

File Compression Settings
File compression options are as follows:
None - File outputs are sent to the browser as is.
Only Cached Files - Only the cached files are transferred to the browser in a GZIP format-if the browser supports the format. If not, the data will be transferred unzipped.
All Files - Both accelerated and cached files are transferred to the browser in a GZIP format-if the browser supports the format. If not, the data will be transferred unzipped.
Recommended:
The recommended compression option is "Only Cached Files", since the compression capabilities make use of the Dynamic Content Caching and there is no extra overhead for generating the compressed file (except for the very first time the URL is accessed.) Compressing accelerated files may cause some overhead and affect the overall performance. Use "All Files" if your main concern is improving the download time for the user.
Note:
There are some instances where it is preferable to deactivate compression for select files.
To deactivate compression:
Deactivate compression entirely - should be done if the server is set to handle compression to prevent compressing files twice and rendering them unusable or when using PHP’s compression feature zlib.
Setting compression to "cached files only" - should be done when there is a large quantity of cached files and the rest of the files do not require compression.
Blacklist - selectively disable compression for files do not require compression such as pictures that are already compressed or small files that do not require compression.
Files under 1k are not compressed at all.
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