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 ### Chunking & Deduplication
 * Files are split into configurable chunks (default: 4MB)
 * Identical chunks across files are deduplicated to save space
+* Please Refer [this](internal/deduplication/README.md) documentation to understand how Deduplication works.
 
 ### Encryption
 Each chunk is encrypted before storage using:
diff --git a/internal/deduplication/README.md b/internal/deduplication/README.md
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+# 🔁 Deduplication in Sietch Vault
+
+## Overview
+
+Sietch Vault uses **content-defined chunking** and **cryptographic deduplication** to minimize redundant data storage.  
+Instead of storing an entire file whenever it changes, Sietch breaks each file into small, fixed- or variable-sized chunks (default: 4 MB), computes unique hashes for each chunk, and only stores chunks that haven't been stored before.
+
+This makes syncing and storage highly efficient i.e identical data across files, folders, or even vaults are stored only once, reducing disk space and sync time.
+
+---
+
+## How Deduplication Works
+
+Deduplication in Sietch happens at **chunk level**, not file level.
+
+1. **Chunking**
+   - Every file added to a vault is split into smaller data chunks.
+   - Chunk size is configurable (`--chunk-size` flag, default 4 MB).
+   - Chunk boundaries can be static or computed using a **rolling hash**, which helps detect identical regions even when a file shifts slightly.
+
+2. **Hashing**
+   - Each chunk is assigned two hashes:
+     - **Content Hash:** A cryptographic hash (e.g., SHA-256) of the unencrypted chunk.
+     - **Storage Hash:** A hash of the encrypted chunk (post-encryption).
+
+3. **Deduplication Check**
+   - When a new chunk is processed, Sietch checks if the **content hash** already exists in the vault index.
+   - If found, it reuses the existing chunk reference instead of storing a duplicate.
+
+4. **Encryption**
+   - Chunks are encrypted **after** deduplication check.
+   - This ensures that identical plaintext chunks yield identical content hashes (so dedup works), while the **storage hash** maintains uniqueness in encrypted storage.
+   - Supported encryption modes:
+     - **AES-256-GCM**
+     - **ChaCha20-Poly1305**
+
+5. **Manifest Tracking**
+   - Each file's metadata (its list of chunks, sizes, hashes) is stored in a **manifest**.
+   - The manifest maps logical files to their deduplicated chunks in the storage backend.
+   - Manifests are versioned, so rolling back or verifying integrity is easy.
+
+---
+
+## Content Hash vs Storage Hash
+
+| Type | Definition | Purpose | Scope |
+|------|-------------|----------|--------|
+| **Content Hash** | Hash of the raw (unencrypted) chunk data. | Used to identify identical content for deduplication before encryption. | Computed once during ingestion. |
+| **Storage Hash** | Hash of the encrypted chunk data. | Used to verify integrity and locate stored encrypted blobs. | Used internally during sync and retrieval. |
+
+**In short:**
+- **Content Hash = Dedup identity**
+- **Storage Hash = Integrity + storage mapping**
+
+By separating these two, Sietch maintains **efficient deduplication** while ensuring **secure encryption** and **data integrity**.
+
+---
+
+## Migration Guide — Enabling Dedup on an Existing Vault
+
+If you created a vault before deduplication was enabled, follow this step-by-step process to migrate safely.
+
+### 🧩 Step 1: Backup Existing Vault
+Before any operation:
+```bash
+sietch backup --output ./vault-backup
+```
+This ensures you can roll back if migration fails.
+
+### ⚙️ Step 2: Enable Deduplication
+Enable dedup in the configuration:
+
+```bash
+sietch config set dedup.enabled true
+sietch config set dedup.chunk-size 4MB
+```
+Or manually in the config file (~/.sietch/config.json):
+
+```json
+{
+  "dedup": {
+    "enabled": true,
+    "chunk_size": "4MB"
+  }
+}
+```
+
+### 🔍 Step 3: Re-index Existing Files
+Run the re-indexing tool to compute chunk hashes for existing data:
+
+```bash
+sietch dedup reindex
+```
+This step scans all files, computes content hashes, and builds a deduplication index.
+
+### 🧼 Step 4: Garbage Collect Old Chunks
+Once the dedup index is ready:
+
+```bash
+sietch dedup gc
+```
+Removes orphaned or redundant chunks not referenced in any manifest.
+
+### 🧠 Step 5: Optimize Storage Layout
+To finalize:
+
+```bash
+sietch dedup optimize
+```
+Reorganizes chunks and manifests for better read/write performance.
+
+**Note:** For very large vaults, perform these steps on a local copy or use the `--dry-run` flag first to estimate changes.
+
+---
+
+## Performance Tuning & Chunk Size Recommendations
+
+Chunk size directly affects both storage efficiency and CPU performance:
+
+| Chunk Size | Use Case | Storage Efficiency | CPU Cost |
+|------------|----------|-------------------|----------|
+| 1 MB | Rapidly changing files, e.g., source code, logs | High | High |
+| 4 MB (default) | Balanced general purpose | Medium | Medium |
+| 8–16 MB | Large static files (media, backups) | Lower dedup gain | Low |
+
+**Tips:**
+- Smaller chunks → better deduplication but slower processing.
+- Larger chunks → faster sync and less overhead but fewer dedup hits.
+- For mixed workloads, keep 4 MB or use `--adaptive-chunking` (if available).
+
+---
+
+## Best Practices
+
+- Run `sietch dedup stats` regularly to monitor chunk reuse and storage savings.
+- Avoid changing chunk size after initial vault creation as this can break dedup references.
+- Use `sietch dedup optimize` monthly to defragment storage.
+- Keep your manifests backed up; they're critical for mapping files to chunks.
+- Use `--dry-run` with dedup operations before running them in production.
+
+---
+
+## Example Workflow
+
+```bash
+# Initialize vault with ChaCha20 encryption
+sietch init --name research --key-type chacha20
+
+# Add files
+sietch add ./datasets ./vault/data
+
+# Check dedup stats
+sietch dedup stats
+
+# Clean up unreferenced chunks
+sietch dedup gc
+
+# Optimize layout
+sietch dedup optimize
+```
+
+Output might look like:
+
+```yaml
+Deduplication Statistics
+------------------------
+Total Chunks: 12,843
+Unique Chunks: 9,557
+Space Saved: 4.21 GB (32%)
+Garbage Collected: 152 chunks
+Optimization Complete: OK
+```
+
+---
+
+## Future Improvements (Planned)
+
+- **Adaptive Chunking** --> variable chunk sizes based on content entropy.
+- **Cross-Vault Dedup** --> share dedup indices securely across multiple vaults.
+- **Dedup Metrics API** --> expose storage savings via REST/CLI metrics.
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