DAG

What Is a Directed Acyclic Graph (DAG)?

A Directed Acyclic Graph (DAG) is a structure that connects events or transactions with arrows, where each arrow indicates a dependency and there are no loops that return to the starting point. In blockchain contexts, DAGs organize transactions or blocks in parallel, reducing bottlenecks and queue times.

Think of a DAG as a “task checklist”: every task must complete its prerequisites before proceeding to subsequent tasks. Since there are no cycles, the network can continuously move forward. Compared to the “single-lane road” of a traditional blockchain with just one main chain, a DAG resembles “multi-lane ramps” that enable simultaneous processing of multiple transactions.

Why Is DAG Used in Blockchain?

DAG is utilized because it allows multiple transactions to be validated in parallel, boosting throughput and reducing user confirmation wait times. It also alleviates congestion and the efficiency loss caused by forks in single-chain architectures.

Chain-based blockchains only accept one latest block at a time, which leads to queuing during peak periods. DAGs let new transactions reference and confirm multiple previous transactions, propelling the network forward. This structure is especially suited for high-frequency micro-payments, IoT data uploads, and applications needing low latency. As of December 2025, several networks using DAGs are running on mainnet, focusing on rapid confirmation and parallel processing (source: project technical documentation and community announcements, Q4 2025).

How Does DAG Work?

The fundamental principle of a DAG is: each new “node” (meaning each participating computer in the network) submits a transaction that references and validates previous transactions, forming a dependency structure without cycles. Dependencies always point from new to old, ensuring the graph stays acyclic.

Typically, a new transaction references two or more prior transactions, and the network uses “weights” or “scores” to assess how widely a transaction is accepted. This recognition is finalized through “consensus”—the process by which all participants agree on the same record. Common methods include voting, sampling, or propagation and accumulation. Once a transaction receives enough cumulative references to meet a threshold, it is considered secure and achieves “finality,” meaning its status cannot be rolled back.

How Does DAG Differ from Chain-Based Blockchains?

The key difference lies in structure and parallelism: chain-based blockchains connect blocks in strict chronological order along a single main chain; DAGs use a graph structure with multiple parallel paths, allowing transactions or blocks to progress concurrently.

In terms of performance, chain-based structures are more prone to forks and rollbacks, and their throughput is limited by block intervals. DAGs boost throughput and reduce confirmation delays by referencing multiple transactions in parallel. On security and complexity, chain-based blockchains are easier to analyze, while DAGs require additional rules to prevent “double spend” attacks and malicious referencing, making their implementation and analysis more complex. For developers and users, this means higher technical barriers but greater potential for high-concurrency applications.

Which Projects Use DAG?

Several well-known projects implement DAG or its variants:

• IOTA’s “Tangle” advances confirmations through mutual transaction referencing, originally targeting IoT and micro-payments (source: IOTA documentation).
• Kaspa uses “BlockDAG,” enabling parallel block production and employing GHOSTDAG rules for ordering and security (source: project technical materials, Q4 2025).
• Avalanche leverages repeated sampling and rapid convergence in its consensus layer, forming a directed graph of voting relationships to reach agreement (source: Avalanche whitepaper and developer docs).
• Hedera’s “Hashgraph” propagates information via “gossip-about-gossip,” recording causal relationships between events as a graph (source: Hedera technical specifications).

Despite differences in implementation details, these projects share the use of DAG’s parallelism and causality to shorten confirmation times and increase throughput.

How Does DAG Improve Scalability and Confirmation Time?

DAG enhances scalability and confirmation efficiency through parallel referencing and local decision-making: parallelism allows multiple transactions to be included simultaneously; local decisions enable nodes to quickly assess transaction security without waiting for the next block from a main chain.

Two common metrics are:

• TPS (Transactions Per Second): measures throughput.
• Finality: means confirmations are irreversible, reflecting user wait times.

Public data shows that by December 2025, most DAG-based networks aim for user confirmations within seconds to tens of seconds and use mechanisms such as weight accumulation or sampling-based voting to guarantee finality (source: project documentation and community announcements, Q4 2025). During peak periods, the parallel structure distributes load and mitigates delay fluctuations caused by congestion.

What Are the Risks of Investing in or Using DAG?

Major risks include network security, implementation complexity, and ecosystem maturity. For network security, DAGs need robust double-spend prevention and consistency rules; high implementation complexity means early versions may use provisional components or parameters that affect decentralization and stability. Ecosystem maturity—including wallets, tools, node software, and developer resources—directly impacts user experience and fund safety.

On the financial side, users should beware of low liquidity and volatility-induced slippage or forced liquidation risks. All token trading requires strong account security (secure passwords, two-factor authentication), diversified holdings, and stop-loss management. For fast-evolving DAG projects, closely monitor upgrade announcements and compatibility notices.

How Should I Trade DAG-Related Tokens on Gate?

Step One: Set up account security. Enable two-factor authentication, keep your fund password safe, and set up security alerts on your login devices.

Step Two: Research project details. On Gate’s market pages and announcement sections, review project introductions, roadmaps, and technical explanations for DAG-related tokens. Pay special attention to consensus mechanisms, finality guarantees, and ecosystem support.

Step Three: Establish a trading plan. Based on your capital size and risk tolerance, define staged entry points and target positions; use price alerts in the market page to avoid chasing price swings.

Step Four: Manage trading tool risks. If you use advanced strategy tools (such as grid trading or dollar-cost averaging) that may become available later, set parameters within acceptable limits and keep reserve funds to handle volatility.

Step Five: Track network updates and announcements. Stay informed about mainnet upgrades, node versions, and ecosystem integration progress; promptly reassess your positions or orders if significant changes occur.

Always remember: all token trading carries loss risks; any referenced information does not constitute investment advice.

What Is the Future Outlook for DAG?

As of the second half of 2025, three key trends are shaping the industry:

• Improved light client and mobile experiences to reduce resource requirements for nodes (source: various project developer roadmaps, Q4 2025);
• Integration with zero-knowledge proofs to enhance security and privacy with verifiable computation;
• Multichain interoperability enabling easier integration of DAG networks with mainstream chain assets and tools.

As development tools and monitoring systems mature, DAG technology is expected to be adopted in more high-concurrency scenarios such as in-game settlements or IoT data aggregation. However, security and decentralization remain critical areas under ongoing evaluation.

What Are the Key Points for Quick Review of DAG?

DAG uses arrows to express sequential dependencies without forming cycles—ideal for parallel processing and rapid confirmation. In blockchain systems, it boosts throughput and finality through parallel referencing combined with consensus rules; notable implementations include IOTA, Kaspa, Avalanche, and Hedera. Compared to chain-based architectures, DAG offers greater potential for high-concurrency scenarios but comes with higher complexity in implementation and security analysis. When investing or using DAG networks, focus on ecosystem maturity, upgrade announcements, account security—and manage risks by following stepwise plans based on research at Gate.

FAQ

Why Can DAG Structures Process More Transactions Than Traditional Blockchains?

DAG enables multiple transactions to be processed in parallel rather than queued individually like traditional blockchains. In a DAG system, as long as there are no conflicts between transactions, they can be validated simultaneously—dramatically increasing throughput. In contrast, Bitcoin or Ethereum can only process a limited number of transactions per block, leading to congestion.

What Does "Topological Sort" Mean in a DAG Project?

Topological sort is the method used by DAG systems to arrange transaction order. Simply put, it organizes transactions along their dependency relationships into a logical sequence—ensuring earlier transactions are confirmed before later ones. Even with concurrent processing, this approach guarantees a final transaction order and prevents double spend issues.

What Are the Main Challenges of DAG Technology? Why Hasn't It Fully Replaced Blockchain?

Although DAG offers high performance, it faces several hurdles: complex consensus mechanisms, difficulty synchronizing nodes, and less straightforward finality compared to traditional blockchains. Additionally, the ecosystem maturity and proven security of DAG projects lag behind long-established chains like Bitcoin or Ethereum. These factors mean that while promising, DAG is still in an exploratory stage rather than mainstream adoption.

How Can I Start Exploring or Using DAG Projects?

Begin by checking out supported DAG-related tokens (like IOTA) on Gate—review market performance and basic project information. Start learning from official documentation about each project's mechanisms; experiment with wallet transfers or trades using small amounts first—avoid investing large sums blindly. Also follow development progress and community discussions to fully assess the practical use of these technologies.

What Causes "Orphaned Transactions" in DAG Systems? How Might This Affect Me?

Orphaned transactions are those that cannot be referenced or validated by other transactions—usually caused by network delays or node outages. For users, this could lead to delayed confirmations or even lost transactions in extreme cases. To mitigate this risk, choose mature and stable DAG projects and maintain reliable network connections; for critical transactions, wait for multiple confirmations before considering them final.