🕸️DIRECTED ACYCLIC GRAPH

A directed graph is a graph made up of a set of vertices connected by directed edges [7].

DAGs are directed graphs with no directed cycles. DAGs comprises vertices and edges, with each edge directed from one vertex to another, such that following those directions will never form a closed loop [8]. Since DAGs are directed graphs with topological ordering, the sequence can only go from earlier to later.

While blockchain and DAG record transactions on a distributed ledger, there are considerable differences. In blockchain, we bundle individual transactions into blocks for validation. The validated blocks are sequentially added to the chain. In contrast, with DAG, individual transactions are linked by the parent transaction confirming the child transaction. In DAG, transactions are not arranged sequentially one after another, and can go from earlier to later, but at the same time confirm not one, but several transactions [9].

DAGs, because of the blockless structure, process transactions much faster. Any node can broadcast and have their transactions processed at any time. While Bitcoin network processes 7 transactions per second (TPS), and Ethereum 20-30 TPS, theoretically for a DAG network, there is no upper limit [10].

The blockless architecture also eliminates the need for expensive consensus mechanisms such as Proof-of-Work. For users this translates to near-instantaneous transactions without wait times and no transaction fees.

IOTA, Nano, Byteball, and DagCoin are notable implementations of DAG.