DAG Based Protocol

Definition ∞ A DAG-based protocol refers to a distributed ledger technology that uses a Directed Acyclic Graph (DAG) structure instead of a linear blockchain to record transactions. Unlike traditional blockchains, which process transactions in sequential blocks, DAGs allow for parallel processing, potentially offering higher scalability and faster transaction confirmations. Each new transaction directly confirms one or more previous transactions, forming a graph rather than a chain. This architecture aims to overcome some of the throughput limitations inherent in linear blockchain designs.
Context ∞ The state of DAG-based protocols is one of ongoing development and experimentation, with several projects seeking to establish viable alternatives to conventional blockchains. A key debate involves proving their security and decentralization properties under various network conditions compared to established blockchain models. Future developments will focus on optimizing consensus mechanisms within DAG structures and achieving wider adoption for high-throughput applications such as IoT data management and microtransactions.