This application uses caching to optimize performance by storing frequently accessed data in memory instead of retrieving it from the database on each request, reducing the time it takes to display data on an e-commerce admin dashboard. Laravel's built-in caching functionality makes it easy to implement caching in the application. The application initially retrieves all data from the database and caches it for a specified time period, but this approach has limitations as it does not account for changes made to the data after it is cached. To address this issue, the application uses the `booted` method on the Quote model to clear the cache when new or updated data is saved, ensuring that the displayed data is always up-to-date. The application also discusses other caching strategies, including write caching and the importance of considering factors such as data consistency and update frequency when implementing caching in an application.