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It's built-in in Zsh: The substitution ‘$(cat foo)’ may be replaced by the faster ‘$(<foo)’.

https://zsh.sourceforge.io/Doc/Release/Expansion.html#Comman...

Is that only for command substitution?

What do you mean? It's specifically for $(cat …) / $(< …): the latter is a faster equivalent of the former. Other than that, see my comment about $READNULLCMD.

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