diff --git a/.github/workflows/containerd-apply-patch.sh b/.github/workflows/containerd-apply-patch.sh
index 12c02f7a1d..27c706196b 100755
--- a/.github/workflows/containerd-apply-patch.sh
+++ b/.github/workflows/containerd-apply-patch.sh
@@ -28,21 +28,13 @@ git mv "${containerdEbuildOldSymlink}" "${containerdEbuildNewSymlink}"
 sed -i "s/CONTAINERD_COMMIT=\"\(.*\)\"/CONTAINERD_COMMIT=\"${COMMIT_HASH}\"/g" "${containerdEbuildMain}"
 sed -i "s/v${VERSION_OLD}/v${VERSION_NEW}/g" "${containerdEbuildMain}"
 
-
-DOCKER_VERSION=$(sed -n "s/^DIST docker-\([0-9]*\.[0-9]*\.[0-9]*\).*/\1/p" app-containers/docker/Manifest | sort -ruV | head -n1)
-# torcx ebuild file has a docker version with only major and minor versions, like 19.03.
-versionTorcx=${DOCKER_VERSION%.*}
-torcxEbuildFile=$(get_ebuild_filename app-torcx/docker "${versionTorcx}")
-sed -i "s/containerd-${VERSION_OLD}/containerd-${VERSION_NEW}/g" "${torcxEbuildFile}"
-
 popd
 
 URL="https://github.com/containerd/containerd/releases/tag/v${VERSION_NEW}"
 
 generate_update_changelog 'containerd' "${VERSION_NEW}" "${URL}" 'containerd'
 
-commit_changes app-containers/containerd "${VERSION_OLD}" "${VERSION_NEW}" \
-               app-torcx/docker
+commit_changes app-containers/containerd "${VERSION_OLD}" "${VERSION_NEW}"
 
 cleanup_repo
 
diff --git a/.github/workflows/docker-apply-patch.sh b/.github/workflows/docker-apply-patch.sh
index 3c5a046386..ac9606c45b 100755
--- a/.github/workflows/docker-apply-patch.sh
+++ b/.github/workflows/docker-apply-patch.sh
@@ -33,12 +33,6 @@ git mv "${cliEbuildOld}" "${cliEbuildNew}"
 sed -i "s/GIT_COMMIT=\(.*\)/GIT_COMMIT=${COMMIT_HASH_CLI}/g" "${cliEbuildNew}"
 sed -i "s/v${VERSION_OLD}/v${VERSION_NEW}/g" "${cliEbuildNew}"
 
-# torcx ebuild file has a docker version with only major and minor versions, like 19.03.
-versionTorcx=${VERSION_OLD%.*}
-torcxEbuildFile=$(get_ebuild_filename app-torcx/docker "${versionTorcx}")
-sed -i "s/docker-${VERSION_OLD}/docker-${VERSION_NEW}/g" "${torcxEbuildFile}"
-sed -i "s/docker-cli-${VERSION_OLD}/docker-cli-${VERSION_NEW}/g" "${torcxEbuildFile}"
-
 # update also docker versions used by the current runc ebuild file.
 versionRunc=$(sed -n "s/^DIST runc-\([0-9]*.[0-9]*.*\)\.tar.*/\1/p" app-containers/runc/Manifest | sort -ruV | head -n1)
 runcEbuildFile=$(get_ebuild_filename app-containers/runc "${versionRunc}")
@@ -63,7 +57,6 @@ generate_update_changelog 'Docker' "${VERSION_NEW}" "${URL}" 'docker'
 regenerate_manifest app-containers/docker-cli "${VERSION_NEW}"
 commit_changes app-containers/docker "${VERSION_OLD}" "${VERSION_NEW}" \
                app-containers/docker-cli \
-               app-torcx/docker \
                app-containers/runc
 
 cleanup_repo
diff --git a/.github/workflows/runc-apply-patch.sh b/.github/workflows/runc-apply-patch.sh
index 155132198c..8aa1b4a495 100755
--- a/.github/workflows/runc-apply-patch.sh
+++ b/.github/workflows/runc-apply-patch.sh
@@ -36,11 +36,6 @@ sed -i "s/runc-${VERSION_OLD}/runc-${VERSION_NEW}/g" app-containers/containerd/c
 
 dockerVersion=$(sed -n "s/^DIST docker-\([0-9]*.[0-9]*.[0-9]*\).*/\1/p" app-containers/docker/Manifest | sort -ruV | head -n1)
 
-# torcx ebuild file has a docker version with only major and minor versions, like 19.03.
-versionTorcx=${dockerVersion%.*}
-torcxEbuildFile=$(get_ebuild_filename app-torcx/docker "${versionTorcx}")
-sed -i "s/runc-${VERSION_OLD}/runc-${VERSION_NEW}/g" "${torcxEbuildFile}"
-
 popd
 
 URL="https://github.com/opencontainers/runc/releases/tag/v${VERSION_NEW}"
@@ -48,8 +43,7 @@ URL="https://github.com/opencontainers/runc/releases/tag/v${VERSION_NEW}"
 generate_update_changelog 'runc' "${VERSION_NEW}" "${URL}" 'runc'
 
 commit_changes app-containers/runc "${VERSION_OLD}" "${VERSION_NEW}" \
-               app-containers/containerd \
-               app-torcx/docker
+               app-containers/containerd
 
 cleanup_repo
 
diff --git a/build_library/build_image_util.sh b/build_library/build_image_util.sh
index 790c1a9556..95714c373a 100755
--- a/build_library/build_image_util.sh
+++ b/build_library/build_image_util.sh
@@ -261,17 +261,6 @@ image_packages_portage() {
         equery --no-color list --format '$cpv::$repo' '*'
 }
 
-# List dependencies for a package runtime dependencies
-
-function package_run_dependencies() (
-  pkg=${1:?}
-  ebuild=$(equery-${BOARD} w "${pkg}")
-  function inherit() { : ; }
-  . "${ebuild}"
-  echo ${RDEPEND}
-)
-
-
 # List packages implicitly contained in rootfs, such as in initramfs.
 image_packages_implicit() {
     local profile="${BUILD_DIR}/configroot/etc/portage/profile"
diff --git a/build_sysext b/build_sysext
index 95b00d49ce..fa862727c1 100755
--- a/build_sysext
+++ b/build_sysext
@@ -31,6 +31,8 @@ DEFINE_boolean generate_pkginfo "${FLAGS_FALSE}" \
   "Generate an additional squashfs '<sysext_name>_pkginfo.raw' with portage package meta-information (/var/db ...). Useful for creating sysext dependencies; see 'base_pkginfo' below."
 DEFINE_string base_pkginfo "" \
   "Colon-separated list of pkginfo squashfs paths / files generated via 'generate_pkginfo' to base this sysext on. The corresponding base sysexts are expected to be merged with the sysext generated."
+DEFINE_string compression "zstd" \
+  "Compression to use for sysext squashfs. One of 'gzip', 'lzo', 'lz4', 'xz', or 'zstd'. Must be supported by the Flatcar squashfs kernel module in order for the sysext to work."
 DEFINE_boolean ignore_version_mismatch "${FLAGS_FALSE}" \
   "Ignore version mismatch between SDK board packages and base squashfs. DANGEROUS."
 
@@ -193,7 +195,7 @@ if [[ ${#} -lt 1 ]]; then
    show_help_if_requested -h
 fi
 
-info "Building '${SYSEXTNAME}' with (meta-)packages '${@}' in '${BUILD_DIR}'".
+info "Building '${SYSEXTNAME}' squashfs with (meta-)packages '${@}' in '${BUILD_DIR}' using '${FLAGS_compression}' compression".
 
 for package; do
   echo "Installing package into sysext image: $package"
@@ -211,6 +213,13 @@ done
 umount "${BUILD_DIR}/install-root"
 umount "${BUILD_DIR}/fs-root"
 
+if [[ "$FLAGS_generate_pkginfo" = "${FLAGS_TRUE}" ]] ; then
+  info "  Creating pkginfo squashfs '${BUILD_DIR}/${SYSEXTNAME}_pkginfo.raw'"
+  mkdir -p "${BUILD_DIR}/img-pkginfo/var/db"
+  cp -R "${BUILD_DIR}/install-root/var/db/pkg" "${BUILD_DIR}/img-pkginfo/var/db/"
+  mksquashfs "${BUILD_DIR}/img-pkginfo" "${BUILD_DIR}/${SYSEXTNAME}_pkginfo.raw" -noappend -comp "${FLAGS_compression}"
+fi
+
 if [[ -n "${FLAGS_manglefs_script}" ]]; then
   if [[ ! -x "${FLAGS_manglefs_script}" ]]; then
     die "${FLAGS_manglefs_script} is not executable"
@@ -218,13 +227,6 @@ if [[ -n "${FLAGS_manglefs_script}" ]]; then
   "${FLAGS_manglefs_script}" "${BUILD_DIR}/install-root"
 fi
 
-if [[ "$FLAGS_generate_pkginfo" = "${FLAGS_TRUE}" ]] ; then
-  info "  Creating pkginfo squashfs '${BUILD_DIR}/${SYSEXTNAME}_pkginfo.raw'"
-  mkdir -p "${BUILD_DIR}/img-pkginfo/var/db"
-  cp -R "${BUILD_DIR}/install-root/var/db/pkg" "${BUILD_DIR}/img-pkginfo/var/db/"
-  mksquashfs "${BUILD_DIR}/img-pkginfo" "${BUILD_DIR}/${SYSEXTNAME}_pkginfo.raw" -noappend
-fi
-
 info "Writing ${SYSEXTNAME}_packages.txt"
 ROOT="${BUILD_DIR}/install-root" PORTAGE_CONFIGROOT="${BUILD_DIR}/install-root"\
       equery --no-color list --format '$cpv::$repo' '*' > "${BUILD_DIR}/${SYSEXTNAME}_packages.txt"
@@ -245,7 +247,7 @@ all_fields=(
   "ARCHITECTURE=${ARCH}"
 )
 printf '%s\n' "${all_fields[@]}" >"${BUILD_DIR}/install-root/usr/lib/extension-release.d/extension-release.${SYSEXTNAME}"
-mksquashfs "${BUILD_DIR}/install-root" "${BUILD_DIR}/${SYSEXTNAME}.raw" -noappend
+mksquashfs "${BUILD_DIR}/install-root" "${BUILD_DIR}/${SYSEXTNAME}.raw" -noappend -comp "${FLAGS_compression}"
 rm -rf "${BUILD_DIR}"/{fs-root,install-root,workdir}
 
 # Generate reports
diff --git a/ci-automation/ci_automation_common.sh b/ci-automation/ci_automation_common.sh
index 283ea7f554..a0745b25ec 100644
--- a/ci-automation/ci_automation_common.sh
+++ b/ci-automation/ci_automation_common.sh
@@ -193,7 +193,7 @@ function docker_image_from_buildcache() {
     local id_file_url_release="https://mirror.release.flatcar-linux.net/containers/${version}/${id_file}"
 
     local local_image=""
-    if image_exists_locally "/${name}" "${version}" ; then
+    if image_exists_locally "${name}" "${version}" ; then
         local_image="${name}:${version}"
     elif image_exists_locally "${CONTAINER_REGISTRY}/${name}" "${version}" ; then
         local_image="${CONTAINER_REGISTRY}/${name}:${version}"
diff --git a/sdk_container/src/third_party/coreos-overlay/coreos-base/coreos/coreos-0.0.1-r309.ebuild b/sdk_container/src/third_party/coreos-overlay/coreos-base/coreos/coreos-0.0.1-r310.ebuild
similarity index 100%
rename from sdk_container/src/third_party/coreos-overlay/coreos-base/coreos/coreos-0.0.1-r309.ebuild
rename to sdk_container/src/third_party/coreos-overlay/coreos-base/coreos/coreos-0.0.1-r310.ebuild
diff --git a/sdk_container/src/third_party/coreos-overlay/coreos-devel/board-packages/board-packages-0.0.1-r11.ebuild b/sdk_container/src/third_party/coreos-overlay/coreos-devel/board-packages/board-packages-0.0.1-r12.ebuild
similarity index 100%
rename from sdk_container/src/third_party/coreos-overlay/coreos-devel/board-packages/board-packages-0.0.1-r11.ebuild
rename to sdk_container/src/third_party/coreos-overlay/coreos-devel/board-packages/board-packages-0.0.1-r12.ebuild
diff --git a/sdk_container/src/third_party/coreos-overlay/sys-kernel/bootengine/bootengine-0.0.38-r23.ebuild b/sdk_container/src/third_party/coreos-overlay/sys-kernel/bootengine/bootengine-0.0.38-r24.ebuild
similarity index 100%
rename from sdk_container/src/third_party/coreos-overlay/sys-kernel/bootengine/bootengine-0.0.38-r23.ebuild
rename to sdk_container/src/third_party/coreos-overlay/sys-kernel/bootengine/bootengine-0.0.38-r24.ebuild
diff --git a/sdk_container/src/third_party/coreos-overlay/sys-kernel/coreos-modules/files/commonconfig-6.1 b/sdk_container/src/third_party/coreos-overlay/sys-kernel/coreos-modules/files/commonconfig-6.1
index 24c15dc8a4..9980f79cbc 100644
--- a/sdk_container/src/third_party/coreos-overlay/sys-kernel/coreos-modules/files/commonconfig-6.1
+++ b/sdk_container/src/third_party/coreos-overlay/sys-kernel/coreos-modules/files/commonconfig-6.1
@@ -854,6 +854,7 @@ CONFIG_SQUASHFS_LZ4=y
 CONFIG_SQUASHFS_LZO=y
 CONFIG_SQUASHFS_XATTR=y
 CONFIG_SQUASHFS_XZ=y
+CONFIG_SQUASHFS_ZSTD=y
 CONFIG_STACKPROTECTOR_STRONG=y
 CONFIG_STRICT_DEVMEM=y
 CONFIG_STRIP_ASM_SYMS=y