In mathematics and computer science, a directed acyclic graph, is a finite directed graph with no directed cycles. It consists of finitely many vertices and edges, with each edge directed from one vertex to another, such that there is no way to start at any vertex v and follow a consistently-directed sequence of edges that eventually loops back to v again. A DAG is a directed graph that has a topological ordering, a sequence of the vertices such that every edge is directed from earlier to later in the sequence.
Above – A topological ordering of a directed acyclic graph: every edge goes from earlier in the ordering (upper left) to later in the ordering (lower right). A directed graph is acyclic if and only if it has a topological ordering.
Due to its blockless nature, the transactions run directly into the DAG networks. The whole process is much faster than those of blockchains based on PoW and PoS.
No Mining Involved
There are no miners on DAG networks. The validation of transactions goes directly to the transactions themselves. For users, this means transactions go through almost instantly.
Friendly to Small Payments
With the advancement of DAG, we’re looking at a future where high functioning and minimum transaction fee chains are possible. That means users can send micro-payments without heavy fees like Bitcoin or Ethereum.
One project in China looks to be taking a serious swing at being the leader in this space. IoT Chain (ITC) is built on DAG and can handle over 10,000 transactions per second. It has a strong vision, strong community, and is backed by leading blockchain funds like ChainFunder and FBG. IoT Chain has a solid shot at becoming categorized as Blockchain 3.0.