Tools Need Not Speak in Text: Latent Context Compression for Agents
Abstract
Large language model (LLM) agents typically append raw tool outputs to their context. Over multi-step interactions, long and noisy observations incur substantial context overhead and dilute the agent's attention to task-relevant information. Existing token pruning and summarization methods remain constrained by discrete text representations, limiting the achievable compression ratios. In this work, we challenge the prevailing assumption that agents must consume tool observations as explicit text tokens. To this end, we propose Coca-Cola, a continuous latent context compression model for LLM agents. Coca-Cola compresses tool observations into latent tokens and embeds them into the input embedding space of the agent. We further introduce Action-Preserving Training, which aligns the agent's next-action distributions under full and compressed observations. This trains the compression model to learn action-sufficient latent tokens that retain decision-critical information. Experiments with web-search agents on four QA benchmarks and two model families show that Coca-Cola reduces the agent's token consumption by 70.01%-89.24% and end-to-end runtime by 24.45%-55.97%, while consistently improving task performance. These results suggest that Coca-Cola offers a promising approach for context compression in agents. Our code is available at https://github.com/THU-Agent/Coca-cola.
Community
We introduce Coca-Cola (Context Compression via Continuous Latent Tokens), a method that lets LLM agents consume tool observations as compact latent representations instead of lengthy text.
Rather than reconstructing the original tool output, Coca-Cola learns to preserve the information that matters for the agent’s next decision. Our Action-Preserving Training aligns next-action distributions under full and compressed observations, while keeping the target agent frozen.
Across four web-search QA benchmarks—Natural Questions, TriviaQA, 2WikiMultiHopQA, and HotpotQA—and two model families (Qwen and GLM), Coca-Cola achieves:
- 70.01%–89.24% lower total agent token consumption
- 24.45%–55.97% shorter end-to-end runtime
- Higher answer EM and F1 than the uncompressed agent in every evaluated setting
The key idea: tool observations need to support the agent’s decisions; they do not have to remain readable text.
We welcome feedback and discussion, especially on extending latent tool observations to other agent workflows!
Okay, 70-89% fewer tokens while the answers get better is the part that stopped me. I like that the compressor is trained to keep what the next action needs instead of rebuilding the text. Does it carry over to other tools, like code output or API responses, beyond web search?
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