This is tested with 13 4K PNG textures; normal compression (first image), normal compression + crunch compressed at 50% quality (second image).

Contrary to popular belief avatar download size (as suggested in unity) is not significantly reduce for avatar uploads; VRChats LZ4/LZMA compression is already handling the heavy lifting of download size reduction so there is evidently severe diminishing returns to using crunch compression.

From my understanding the LZ4/LZMA algorithm is exceptionally good at finding and removing redundancy. Adding Crunch compression on top provides diminishing returns because there's little additional redundancy for LZ4/LZMA to compress.

Here is what needs to be addressed immediately:

Uncompressed size being drastically reduced in avatar stats when fundamentally this is not what crunch compression does. This in turn is letting people bypass the 500mb uncompressed download size limit.

This whole dilemma could be resolved by simply disabling crunch compression for avatar, especially since crunch compression will cause loading textures onto the GPU to be a bit slower for virtually no reason.