As the title suggests. Massive performance degradation?
And what technology does it use?
Depends on your hardware of course. Most important performance enhancement is using a CPU with AES-NI capabilities, provided by most of the recent Core i5/i7 processors and a kernel supporting it (most recent versions do). It's similar to video acceleration, but then for AES calculations.
I haven't done real benchmarking, but I find almost no slowdown in doing a read-only benchmark using 'palimpsest' (Gnome Disk Utility) on my Intel 310 series 80GB SSD using dm-crypt (full disk) encryption enabled. A steady ~ 250 MB/s sequential reading all the way on an LVM LV (on top of dm-crypt).
See this Phoronix article for serious benchmarks of AES-NI and dm-crypt. An excerpt from that article:
This is a bit outdated now, and eCryptfs might not be suffering these slowdowns anymore.