Sharp image using an image block

Guys, I am trying to put an image/badge on my website using the image blocks. It is a 125x125 and the image is sharp on the pc. But when uploading it is buried. Probably because it is stretching it. So one thing that has occured to me is that maybe I need to re-size the image taking into account how many megapixles each square/rectangle of that image block corresponds to. Any ideas?