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This is really just a curious question, but I've been playing a lot with overlay Filesystems at work. Have you tried mounting the tars as overlays directly? (I'm not sure which driver, but to my knowledge podman does it this way) this way you wouldn't have to unpack the tarballs and also have an immutable base for the container.

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Tarballs must be compressed in a very particular way to support random access, and even that only works with on-demand decompression using a slow compressor (zlib). In Fly's model this would probably also need to happen inside the container's VM.

All together it might save a little one-time startup cost, at the expense of making every other operation on the filesystem much slower for the life of each container.

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