Let $G$ be a graph and $S, T subseteq V(G)$ be (possibly overlapping) sets of terminals, $|S|=|T|=k$. We are interested in computing a vertex sparsifier for terminal cuts in $G$, i.e., a graph $H$ on a smallest possible number of vertices, where $S cup T subseteq V(H)$ and such that for every $A subseteq S$ and $B subseteq T$ the size of a minimum $(A,B)$-vertex cut is the same in $G$ as in $H$. We assume that our graphs are unweighted and that terminals may be part of the min-cut. In previous work, Kratsch and Wahlstrom (FOCS 2012/JACM 2020) used connections to matroid theory to show that a vertex sparsifier $H$ with $O(k^3)$ vertices can be computed in randomized polynomial time, even for arbitrary digraphs $G$. However, since then, no improvements on the size $O(k^3)$ have been shown. In this paper, we draw inspiration from the renowned Bollobass Two-Families Theorem in extremal combinatorics and introduce the use of total orderings into Kratsch and Wahlstroms methods. This new perspective allows us to construct a sparsifier $H$ of $Theta(k^2)$ vertices for the case that $G$ is a DAG. We also show how to compute $H$ in time near-linear in the size of $G$, improving on the previous $O(n^{omega+1})$. Furthermore, $H$ recovers the closest min-cut in $G$ for every partition $(A,B)$, which was not previously known. Finally, we show that a sparsifier of size $Omega(k^2)$ is required, both for DAGs and for undirected edge cuts.
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