Crypto glossary
Directed acyclic graph (DAG)
A directed acyclic graph (DAG) is a ledger structure where each transaction references several earlier ones instead of sitting in a single chain of blocks.
In graph terms, a DAG is a set of nodes joined by one-way links that never loop back on themselves. Applied to a ledger, each new transaction or block points to one or more previous ones, confirming them indirectly. Instead of a single line of blocks, the record grows as a branching web that can accept many additions in parallel.
Networks such as IOTA, Hedera and Nano use DAG-based designs to aim for fast confirmation and low fees, and some proof-of-work chains like Kaspa use a block DAG so that blocks produced at the same time are merged rather than discarded. The structure is mainly a way to raise throughput without forcing every participant to wait for one block at a time.
Ordering transactions in a web is harder than in a chain, so many DAG networks have relied on coordinators, committees or other trusted components, at least in their early years. Higher theoretical speed does not automatically mean more decentralisation, and DAG designs are generally less battle-tested than Bitcoin-style blockchains.
Example
On a DAG ledger, a new payment approves two earlier unconfirmed transactions as it is added, so users effectively help confirm each other's payments instead of waiting for a miner.