Can you post a screenshot of the degraded image quality here?
Take a screenshot and duplicate the file. Put one in your vault and embed it, then keep the other outside of your vault. I imagine they both stay the same file size—if so, the files are the same. The quality might look “degraded” because it’s getting resized somehow. If this is the case, try experimenting with different themes—maybe the one you’re using does something to resize images.