LZMA2

The Lempel–Ziv–Markov chain algorithm (LZMA) is an algorithm used to perform lossless data compression. It has been under development either since 1996 or 1998 and was first used in the 7z format of the 7-Zip archiver. This algorithm uses a dictionary compression scheme somewhat similar to the LZ77 algorithm published by Abraham Lempel and Jacob Ziv in 1977 and features a high compression ratio (generally higher than bzip2) and a variable compression-dictionary size (up to 4 GB), while still maintaining decompression speed similar to other commonly used compression algorithms.

LZMA2 is a simple container format that can include both uncompressed data and LZMA data, possibly with multiple different LZMA encoding parameters. LZMA2 supports arbitrarily scalable multithreaded compression and decompression and efficient compression of data which is partially incompressible.

LZMA uses a dictionary compression algorithm (a variant of LZ77 with huge dictionary sizes and special support for repeatedly used match distances), whose output is then encoded with a range encoder, using a complex model to make a probability prediction of each bit. The dictionary compressor finds matches using sophisticated dictionary data structures, and produces a stream of literal symbols and phrase references, which is encoded one bit at a time by the range encoder: many encodings are possible, and a dynamic programming algorithm is used to select an optimal one under certain approximations.

Prior to LZMA, most encoder models were purely byte-based (i.e. they coded each bit using only a cascade of contexts to represent the dependencies on previous bits from the same byte). The main innovation of LZMA is that instead of a generic byte-based model, LZMA's model uses contexts specific to the bitfields in each representation of a literal or phrase: this is nearly as simple as a generic byte-based model, but gives much better compression because it avoids mixing unrelated bits together in the same context. Furthermore, compared to classic dictionary compression (such as the one used in zip and gzip formats), the dictionary sizes can be and usually are much larger, taking advantage of the large amount of memory available on modern systems.

...
Wikipedia