Directed Acyclic Graph (DAG)

What Is a Directed Acyclic Graph (DAG)?

A directed acyclic graph (DAG) is a type of data structure aiming to improve upon shortcomings of a conventional blockchain. One difference between a DAG and a standard blockchain is that DAGs have no blocks, though transactions come through via nodes.

A DAG works like a graph with various vertices and edges, moving in only one direction and recording in the form of vertices on top of each other. Each vertex represents a transaction. When a new transaction arrives, it must first reference another that occurred previously.

This allows the transaction to be received on the network and the DAG to work efficiently. Nodes can also confirm multiple transactions simultaneously, since each one can have more than one parent root.

Benefits of a DAG

A DAG has many different solutions and benefits as compared to a traditional blockchain. For example, a DAG offers high transaction speeds since blocks do not limit them. Another benefit of a DAG is its minimal transaction costs compared to blockchains like Ethereum and Bitcoin.

DAGs seek to improve on certain flaws in blockchains, particularly scalability. Since DAGs do not require blocks, they do not require mining, allowing for more environmentally friendly and energy-efficient networks.

Key Takeaway

A directed acyclic graph (DAG) is a type of structure commonly found as a form of consensus for a cryptocurrency.

Related Words