Dirac is an open source video codec. It uses a traditional hybrid video codec architecture, but with the wavelet transform instead of the usual block transforms. Motion compensation uses overlapped blocks to reduce block artefacts that would upset the transform coding stage.

Dirac can code just about any size of video, from streaming up to HD and beyond, although certain presets are defined for different applications and standards. These cover the parameters that need to be set for the encoder to work, such as block sizes and temporal prediction structures, which must otherwise be set by hand.