What is DAG (Directed acyclic graph)
You have repeatedly heard what scaling is a problem for blockchain technology. For this reason, even Bitcoin has long been a network with extremely low bandwidth. Currently, many initiatives aimed at improving networks are circulating around the crypto space.
Some experts suggest increasing the block size, while others want to reduce processing time on the network. There is much debate about which variable should be changed, and given the complexity of the task, it is impossible to say when the problem will be solved.
However, some projects offer a more radical approach to solving problems: they created completely new networks that do not use the blockchain data structure at all. Instead, they seek to implement something called a directed acyclic graph (DAG). That’s what we’ll talk about today.
The idea of cryptocurrency on DAG (directed acyclic graph) was first introduced in 2015 by Sergio Demian Lerner in his article in which he outlined his concept of digital currency under the name DAG coin. DAG technology is an alternative system that allows cryptocurrencies to function similarly to those that use blockchain technology without the need for blocks and miners.
Directional acyclic graphs are a general category in graph theory, computer science, and mathematics, which essentially make up a topological order in which vertices (e.g. nodes, tasks, or events) are connected to edges (directional arrows, dependency relations, or transactions) in an asynchronous way (nodes are not Can return, and the flow goes in one direction).
DAGs are used in modeling many types of information, where collections of events should be presented in how they affect each other (probabilistic structures in Bayesian networks, records of historical data, distributed version control systems, etc.) This deviates from the paradigm of blockchain technology in that the blockchain structure works by combining flat sequences of lists and grouping them into blocks.
With the blockchain, each block refers to the previous one and turns it on, which leads to bottlenecks when too many transactions begin to arrive too often. This makes it difficult to reach consensus on valid blocks (the notorious scalability problem). In a structured DAG environment, there is no theoretical limit on transaction throughput because transactions are directly connected, not grouped and serialized on the same line.
General properties of DAG
The technical design of DAG allows for a wider range of algorithms that can be applied, and therefore greater flexibility. There are several DAG-based projects, they are all very different from each other and deserve attention, and they all created their code base from scratch. Nevertheless, any DAG-based project will have a number of similar characteristics.
- Acyclicity: time flows in one direction. New transactions refer to old, but not vice versa. In a database availability group, each node depends on the previous ones that reference it. This allows you to execute transactions locally or even autonomously and process, confirm or complete at later stages.
- Delay: execution speed and acknowledgment time are not limited by block size, but are limited by bandwidth between communicating nodes. Theoretically, there is no limit to how much the system can scale.
- Less waste: fixed supply, mining is not involved. Each transaction issuer is simultaneously a validator. This allows for free micro- and nano-transactions, limiting the impact on the environment.
- Transactions with a null value: for example, messages or transactions without a value, requiring or not requiring digital signatures and placed in a UDP packet.
- Trimming the database: allows you to maintain the harmony of the database, and different nodes can only save the history that they are interested in or relevant to them.
DAG technology is already used in a number of cryptocurrencies, as developers are actively looking for alternatives to the current blockchain architecture.
DAG technology is still very young and not tested, and developers still have much to do. Nevertheless, it is already used by some ambitious cryptocurrency projects. But technology development is a process of identifying and correcting problems, and it is this approach that has allowed us to create large ecosystems like Bitcoin and Ethereum. DAG experts predict the same way.