Dec 14, 2018

6 min read

Trias Talents Opinion丨What Makes A Project Value at More than $400 Million?

There are some talents who are changing the world a little bit every day. They are always believed in technology but never limited by itself. They are passionate and optimistic about the future but never satisfied with what they have achieved.

Wang Junqing

Wang Junqing, serve as Trias Senior Developer, graduated from Peking University with a master degree in Information Security. He used to work in China Mobile Research Institute, responsible for the development of the virtual network part of cloud computing, and contributed significantly to open source projects of Openstack community. Currently he focuses on DAG research and the implementation of blockchain system.

Blockchain inefficiency has been a drawback for a long time. The graph structure reduces the order in which blocks are generated and breaks through the efficiency bottleneck of consensus algorithm. According to a paper by Tsinghua University, the Nakamoto protocol could theoretically be extended to thousands of times per second through DAG.

Projects based on the technology are valued at more than $400M and have secured financing of about $35 million.

1. What is the DAG?

Traditional blockchain is data structure based on blocks and chains. This method has inherent shortcomings, however, at any time the block is generated by the “bookkeeper” alone to complete.

The most obvious problem with single-point write into blockchain is inability to handle high throughput.

As we all know, the block size depends on blockchain its throughput, if the block is too small, it cannot package transactions in the system; if the block is too large, the whole blockchain system data volume will expand, ordinary users cannot run node because it may cause the centralization trouble.

2. Typical case-IOTA

Speaking of the most well-known DAG implementation in blockchain industry, we have to mention IOTA, it is a revolutionary new platform designed for the Internet, which defines a unique underlying network structure called Tangle.

The Tangle is a moniker used to describe IOTA’s directed acyclic graph (DAG) based transaction settlement and data integrity layer focused on the Internet-of-Things (IoT). It is essentially a string of individual transactions that are interlinked to each other and stored through a decentralized network of node participants.

Different from the traditional blockchain, the Tangle is not joined by the miner single point accounting mode, but by the parallel verification of the whole network. That is, participants are done by the verification across the network while joining a new transaction. In detail, the Tangle is essentially a directed acyclic graph, in which all outgoing transactions end up being part of the graph, known as points for storing transactions.

Importantly, the Tangle does not have miners as users of the network function as the miners themselves through performing small computational Proofs of Work (PoW) for each transaction by verifying the previous transactions submitted to the network. Only focused on the network to scale for the global micropayment network of interconnected IoT devices. In a word, the Tangle is designed to offer a solution to the heterogeneous nature of current blockchain systems.

As Tangle continues to evolve, more and more participants will initiate transactions, the system will become safer and faster, validation time will be shorter. But there aren’t that many nodes in the current Tangle network. The regulator (Coordinator), which sends out a transaction every two minutes that doesn’t contain any value at all. The centralization strategy known as milestone, all transactions directly referred to by milestones are identified and vice versa.

The logic behind this is that Tangle is a big enough network, but it’s still in the boot phase.

3. A simple landing practice

How can DAG be incorporated into existing solutions to improve throughput? Here’s a simple way to think about it. In the cache access system, DAG can be used to receive the transaction data, and then extract the data from the DAG cache by main chain timing or push the data from the DAG cache timing. It is worth noting that here DAG is only used as a cache for transactions and is not responsible for verifying transactions. In practice, you can merely use IOTA as a DAG cache.

Thereafter, the key here is how to determine status of each transaction in the DAG cache, and how to distinguish between unsynchronized and synchronized transactions? This brings us to the Tag field for each transaction in IOTA.

The Tag field is reserved in IOTA for each transaction, and we use it to identify the transaction status. At this point, a simple landing scenario can be completed.

4. Future landing prospects

The above landing scheme is relatively simple. It is gratifying to see that an increasingly novel DAG schemes are being proposed in blockchain industry.

At a blockchain meeting before, a professor at Shanghai Jiaotong University proposed a layered DAG architecture. His core idea is to find a main chain in the upper DAG structure layer and then serialize all transactions. And the simplest implementation of main chain in the upper layer could be on the committee as a whole to generate a transaction, a process that the professor has also demonstrated in his forthcoming paper.

In the paper published by Tsinghua University, a DAG architecture Conflux is proposed, whose core idea is that each new block will select a leading block as the corresponding block of the central chain. This will result in a DAG of blocks on each node.

Through the GHOST algorithm, we can calculate a main chain (each node in the main chain is the point with the most nodes in the minimum spanning tree of DAG), then we can do a full sorting of DAG based on the topological sequence. It is equivalent to flattening it into a chain through a series of trade conflict detection and resolution methods to achieve the purpose of expanding consensus speed.

Long Fan, a professor at the University of Toronto, said that the conflux project aims to solve the problem that blockchain technology cannot be used on a large scale. If conflux succeeds, smart contract can be used more widely and become a new force in finance and insurance.

Finally, with blockchain scaling solutions on the horizon, seeing whether or not the “blockless” Tangle can scale to levels where it functions as the distributed framework for the emergence of our technical concept will be fascinating to watch.

Official Channels