Why DAGs Don’t Scale Without Centralization

Going horizontal

To understand the potential issues with DAGs, it is important to understand how they operate. DAGs are directed graphs with no directed cycles. What this means in practice is that unlike blockchains, which operate on a vertical architecture (i.e. miners process a block, this block gets added to the chain, the miners mine another block, etc), DAGs utilize a horizontal architecture.

No global state

Blockchains operate through network participants having an overview of the entire ledger at any one time. Through this, all participants (or nodes) are able to check a transaction against ledger history and can check against the threat of double spending. This lies at the core of blockchain technology, with all participants having open and equal access to all transactions.

Life in the real world

In test conditions, variables such as hardware and location are usually optimized or a non-issue (as it can be difficult or unwanted to spin up nodes worldwide). In real-world scenarios, no network can control these factors. That means they need to be prepared for the worst-equipped and worst-located nodes. In a network that provides instant (or near instant, given the limitations of speed of light/internet) confirmations, this causes a problem for further away or slower nodes, which will quickly stop being synchronized with the network and instead begin to see unconfirmed transactions accumulate.

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Radix DLT — The Decentralized Finance Protocol

Radix DLT — The Decentralized Finance Protocol

The first layer 1 protocol specifically built to serve DeFi