How do you optimize the performance of a RESTful API?

Short answer: Reduce payload size (use JSON instead of XML, compress responses). Implement pagination for large datasets. Apply caching at multiple levels. Use async I/O (non-blocking calls). Minimize database calls (batch queries, stored procedures). Enable GZIP compression on responses. Profile and monitor using APM tools (New Relic, Application Insights).

Real-world example (ShopNest)

Creating an order is POST /api/orders → 201 with Location header. Fetching is GET /api/orders/{id} → 200 or 404.

Say this in the interview

1. Define — one clear sentence (the short answer above).
2. Example — relate it to a project like ShopNest or your real work.
3. Trade-off — when you would not use it.