Is Directed Acyclic Graph (DAG) better than blockchain?
Another DLT distributed ledger technology type is the Directed Acyclic Graph (DAG) technology.
Both blockchains and DAGs use a distributed ledger to record transactions but in very different ways. We’ll compare them briefly in terms of how they work.
I guess the question is, is the DAG technology a competitor to blockchain technology or a better version of it?
Let’s find out!!!
Blockchain Technology
Since the inception of blockchain technology, it has created an avenue for other technologies to exist, making it a technology that can accommodate all.
Blockchain is a transparent DTL distributed ledger technology that replicates all the network nodes.
This distributed ledger creates an immutable chain of transaction blocks in sequential order. To be validated, we bundle transactions into blocks. We add stamped blocks to a chain of previously validated blocks.
Blockchain uses consensus mechanisms, which are algorithms designed to validate transactions. Before validation takes place, at least 51% of the nodes need to be in consensus to ensure that the block is valid before executing it.
Note: Since the blockchain uses “The single block, single-chain topology,” it makes verifying transactions even slower. If a blockchain has a high block generation rate, it leads to a corresponding increase in the number of blocks, which increases network delay.
In the blockchain, we verify every block on a single chain. Due to network delay and the generation of more blocks on the network, this increases the options of the nodes to make an incorrect bet on the longest chain, thus leading to branching and therefore becoming an orphan, i.e., it becomes a malicious node that reduces the security of the network.
Orphans are blocks (transactions) created outside the longest chain because of unavoidable network propagation delays. Orphans are created when the block generation rate in the blockchain is high because a more significant data block takes longer time to transmit.
Blockchain scalability has many barriers, including processing speeds, disk input/output, RAM, capacity, and syncing of new nodes.
BlockDAG technology can address these limitations in the blockchain with improved hardware and technology.
The Block DAG (DIRECTED ACYCLIC GRAPH) Technology
DAG is an abbreviation for Directed Acyclic Graph. It is a distributed ledger technology in topological order and a directed graph data structure like the blockchain.
Although the technology is frequently associated with blockchain, DAG is not technically equivalent. We regard it as another type of Distributed Ledger Technology (DLT).
DAG is a network of individual transactions linked to multiple other transactions that eliminate the need for blocks.
The critical difference between the DAG technology and blockchain is that blockchain always references the previous block, which is “one dimensional.”
While in DAGs, we can reference multiple transactions, offering “two-dimensionality,” a promising approach to making a decentralized network scale.
DAGs can solve scalability in blockchain because, for every transaction, a node is assigned to see the transaction to its end, eliminating the need for consensus mechanisms like the blockchain.
The DAG model is more efficient at storing data, similar to a tree structure, where we can validate more transactions simultaneously.
In this model, it connects nodes like the branches of a tree. A node can have over one parent root, so users don’t need to wait for a complete transaction to process a new one.
Is Directed Acyclic Graph (DAG technology) better than blockchain?
With everything we have said so far, we can agree that the blockdag is better than the blockchain. But instead of comparing both technologies, how about we put them to work together?
Integrating the blockdag protocol in the blockchain will make the validity of blocks faster because, with more nodes, developed transactions are processed more quickly than on blockchains that use consensus mechanisms.
Like the pow consensus mechanism where miners have to compete to add a block to the chain with dags, a new node is generated on the network when a new transaction comes up.
Miners won’t have to solve computational problems/compete to add blocks to the chain to carry out the transaction, making it decentralized.
This fact means that the DAG model can improve the usability of a network by making it more scalable.
Here’s an example of projects that implements the blockdag (DAG technology):
TARAXA
Taraxa is a public ledger purpose-built, fast, scalable, and device-friendly blockchain designed to help businesses make better and more responsive decisions.
The blockchain believes technologies solve real-world problems and cannot develop in isolation. They have developed and integrated different scaling solutions, including blockdag technology.
The blockdag protocol maximizes throughput without sacrificing the security of the network. The network has achieved over 5,000 TPS and sub-second block inclusion latency, with a roadmap towards an impressive 50,000 TPS.
IOTA
IOTA was one of the first start-ups to implement blockdag technology. Its central premise, namely solving the issues around blockchain by introducing a different data structure, remains.
IOTA is a distributed ledger technology. However, the data structure it uses is a directed acyclic graph (DAG) called Tangle, which helps to speed up the validation process by employing the “Tangle concept” (groups of nodes).
IOTA stands for Internet of Things Applications and aims to provide users with near-instant transactions with no fees. It’s a low-cost solution for cryptocurrency micro-payments.
According to Dominik Schiener, co-founder of IOTA, we’ve been in the blockchain space for so long, since 2011/2012, that we realized we needed to improve the blockchain because this “one-dimensional architecture (blockchain) is not scalable“.
So we developed the Tangle concept, which is now multidimensional and lacks blocks and chains, but transactions are interconnected.
The advantage here is that it is much more scalable. IOTA recorded over 10,000 TPS in their testnet.
Nano
Nano is yet another DAG-based cryptocurrency platform. It has a network of independent blockchains connected by nodes. The technology, known as block-lattice, is a hybrid of the DAG-based framework and traditional blockchain.
Nano claims to handle multiple transactions regardless of size. The project also claims to be infinitely scalable, with the main selling point being that there are no network fees.
Every user with an individual wallet receives a blockchain and is the only one who can change it in Nano. To complete a transaction, both the sender and the receiver must operate on the blockchain.
Nano emphasizes that users appreciate the high transaction speed and zero transaction fees.
DAGs – the future of scalability in blockchain?
Well, because of the blockchain technology, a new distributed ledger (DAG) that does not require miners, electricity, or transaction fees to have an efficient protocol, a technology that will be ready for production and that billions of users, including machines and humans, will use and benefit from arises.
Hence, a technology that can accommodate all. DAGs give the network a high level of decentralization while also making it scalable.