The p2p protocol presently only supports propagation of solved blocks in full; i.e., blocks are not compressed.
However, the Corallo Relay Network does support a sort of compression. Rather than transmitting all the transactions in a solved blocks, since most the other miners know about them already, it just transmits indices that refer to each transaction (sort of like a map for how the TXs fit in the block). Greg Maxwell claims that the Corallo Relay Network attains a coding gain of about 250 (1 MB is compressed to about 4 kilobytes); however, I believe it is less in practice.
Techniques like invertible bloom lookup tables (IBLTs) could also be used to compress solved blocks in the future; Rusty Russell is presently researching this possibility.
Compression of solved blocks has the effect of reducing the network propagation impedance. It results in lower fees to users (positive) but also lower fees to spammers (negative). This chart shows how fees decline with improvements to network propagation impedance (x-axis in the chart):
Source: https://dl.dropboxusercontent.com/u/43331625/feemarket.pdf
However, the Corallo Relay Network does support a sort of compression. Rather than transmitting all the transactions in a solved blocks, since most the other miners know about them already, it just transmits indices that refer to each transaction (sort of like a map for how the TXs fit in the block). Greg Maxwell claims that the Corallo Relay Network attains a coding gain of about 250 (1 MB is compressed to about 4 kilobytes); however, I believe it is less in practice.
Techniques like invertible bloom lookup tables (IBLTs) could also be used to compress solved blocks in the future; Rusty Russell is presently researching this possibility.
Compression of solved blocks has the effect of reducing the network propagation impedance. It results in lower fees to users (positive) but also lower fees to spammers (negative). This chart shows how fees decline with improvements to network propagation impedance (x-axis in the chart):
Source: https://dl.dropboxusercontent.com/u/43331625/feemarket.pdf