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Q1) Do I need mod_deflate running on apache? does it help in performance in anyway?

Q2) Do I need mod_cache running on apache if nginx is serving a static caching proxy?

<IfModule mod_cache.c>
CacheEnable disk
CacheIgnoreNoLastMod On
CacheMaxExpire 86400
CacheLastModifiedFactor 0.1
CacheStoreNoStore Off
CacheStorePrivate On
<IfModule mod_disk_cache.c>
CacheDefaultExpire 3600
CacheDirLength 3
CacheDirLevels 2
CacheMaxFileSize 640000
CacheMinFileSize 1
CacheRoot /opt/apicache
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up vote 0 down vote accepted

You don't need to run mod_deflate on apache, use compression of nginx instead. Secondly you can use caching of nginx instead of mod_cache on apache.

You can read up using the link below to get a better idea of nginx caching.

How to set up Nginx as a caching reverse proxy?

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but an off question... wouldn't mod_deflate/cache running increase the performance of content passed to nginx? – John Jan 20 '11 at 19:25

If Nginx was doing gzip compression on the client's incoming connection, I would guess that the overhead of compression in Apache just to get the response back to Nginx would outweigh, or at least cancel out any gain.

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