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SDE is, at it's most basic, a compression mechanism for the intermediate representation of a compiler. Similiarly to Huffman coding, an SDE encoder and decoder pair both builds a dictionary of the datastream while building it and decoding it respectively. The dictionary entries is the used to encode/decode the following part of the data stream, which cause more entries to be added to the dictionary, etc., meaning that the later you are in the data stream, the more of the stream will refer to previously added dictionary entries instead of having to be all verbose and include the full definition. But to call it just a compression method would be selling it very short. The appeal of SDE is that it can be used as a machine independent representation of a program, while at the same time it can (if used properly) retain far more semantic information about the program than a typical bytecode. Contrary to most bytecode, SDE retains the structure of the program as represented by the compiler.