Why does connecting one large MCP server cost context on every single turn, even when you never touch most of its tools?

A gRPC-proxy MCP server exposing ~200 tools across 8 services has every tool name listed in the system prompt on every turn for ToolSearch, even though full schemas are deferred and most tools are never used in a given session.

Category: AI / Agents · Trend: Agents · Opportunity score: 6.5 / 10

What is the “Why does connecting one large MCP server cost context on every single turn, even when you never touch most of its tools?” problem in 2026?

A gRPC-proxy MCP server exposing ~200 tools across 8 services has every tool name listed in the system prompt on every turn for ToolSearch, even though full schemas are deferred and most tools are never used in a given session.

Who has this problem?

Developers connecting large enterprise MCP servers to Claude Code.

Recorded source context

Dataset source note: Even though the tools are deferred and their full schemas aren't loaded, every tool name is included in the system prompt so the model knows they exist for ToolSearch... A server with ~200 deferred tools across ~8 services has the tool name list consume context on every turn.

This note may summarize the referenced material rather than quote it verbatim. Source label: anthropics/claude-code GitHub issue #27208, DanielPBak, 20 Feb 2026, closed as duplicate. (reference).

Existing players in this space

  • Deferred tool loading: Reduces schema cost but still lists every flat tool name up front.
  • Manual server disconnection: Avoids the cost entirely but loses the server's functionality.

What existing players are missing

Hierarchical/nested tool discovery where the system prompt shows only service-group names, and ToolSearch drills into individual tools and schemas on demand, cutting a 200-entry list down to ~8.

How Real Problem AI scores this opportunity

Aggregate score: 6.5 / 10. Four-axis rubric:

  • Problem severity: 6 / 10
  • AI feasibility today: 8 / 10
  • Market signal: 5 / 10
  • Competition gap: 7 / 10

How to build a solution: stack hints

  • Hierarchical tool namespace design
  • Nested ToolSearch resolution
  • MCP server-side grouping metadata
  • Context-cost benchmarking

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