latent diffusion = VAE + diffusion, separately trained stage 1: train VAE (encoder + decoder), freeze image x 512 × 512 × 3 encoder E latent z 64 × 64 × 4 (1/16 of pixels) decoder D x̂ (reconstruction) L1 + LPIPS + GAN stage 2: train diffusion on z-space z_T ~ N(0, I) U-Net / DiT ε_θ(z_t, t, text_embed) iterate T->0 z_0 D(z_0) decoded image text encoder (CLIP / T5) -> cross-attention in each U-Net block same loss as pixel-space DDPM: L = E || ε - ε_θ(z_t, t, c) ||² ~64x fewer FLOPs than pixel diffusion for the same quality CFG: ε_cfg = (1+w) · ε_cond - w · ε_uncond (w ≈ 3-7)