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Directed Acyclic Graph (DAG)
What is a Directed Acyclic Graph (DAG)?
A Directed Acyclic Graph (DAG) is a data structure and consensus mechanism used in some blockchain and distributed ledger technologies. Unlike traditional blockchain structures, which link blocks sequentially, DAGs allow for a more complex network of transactions that can be processed in parallel.
Key Aspects
Non-linear Structure: Transactions can reference multiple previous transactions.
Parallelization: Allows for simultaneous processing of transactions.
Scalability: Often offers higher transaction throughput than traditional blockchains.
No Blocks: Transactions are added directly to the network without being grouped into blocks.
Consensus Mechanism: Uses various methods to achieve agreement on the state of the network.
How DAGs Work
Transaction Creation: New transactions are created and reference previous transactions.
Validation: Each new transaction must validate two or more previous transactions.
Confirmation: As more transactions reference a given transaction, it becomes more confirmed.
Conflict Resolution: Various methods are used to resolve conflicting transactions.
Network Growth: The graph expands as new transactions are added.
DAGs vs. Traditional Blockchains
Structure: DAGs have a more complex, web-like structure compared to linear blockchains.
Scalability: Generally offer higher transaction throughput.
Confirmation Time: Often provide faster transaction finality.
Mining: Many DAG-based systems don't require mining.
Fees: Can often operate with lower or no transaction fees.
Similar Terms
Blockchain: The more traditional linear structure used in many cryptocurrencies.
Consensus Mechanism: The method by which agreement is reached on the state of the network.
Distributed Ledger Technology: The broader category of technologies that includes both DAGs and blockchains.