We introduce the theoretical foundations of the Tangle 2.0, a probabilistic leaderless consensus protocol based on a directed acyclic graph (DAG) called the Tangle. The Tangle naturally succeeds the blockchain as its next evolutionary step as it offers features suited to establish more efficient and scalable distributed ledger solutions. Consensus is no longer found in the longest chain but on the heaviest DAG, where PoW is replaced by a stake-or reputation-based weight function. The DAG structure and the underlying Reality-based UTXO Ledger allow parallel validation of transactions without the need for total ordering. Moreover, it enables the removal of the intermediary of miners and validators, allowing a pure two-step process that follows the propose-vote paradigm at the node level and not at the validator level. We propose a framework to analyse liveness and safety under different communication and adversary models. This allows providing impossibility results in some edge cases and in the asynchronous communication model. We provide formal proof of the security of the protocol assuming a common random coin.

The Unspent Transaction Output (UTXO) model is commonly used in the field of Distributed Ledger Technology (DLT) to transfer value between participants. One of its advantages is that it allows parallel processing of transactions, as independent transactions can be added in any order. This property of order invariance and parallelisability has potential benefits in terms of scalability. However, since the UTXO Ledger is an append-only data structure, this advantage is compromised through the presence of conflicting transactions. We propose an extended UTXO Ledger model that optimistically updates the ledger and keeps track of the dependencies of the possible conflicts. In the presence of a conflict resolution mechanism, we propose a method to reduce the extended ledger back to a consistent UTXO Ledger.

Permissionless reputation-based distributed ledger technologies (DLTs) have been proposed to overcome blockchains’ shortcomings in terms of performance and scalability, and to enable feeless messages to power the machine-to-machine economy. These DLTs allow machines with widely heterogeneous capabilities to actively participate in message generation and consensus. However, the open nature of such DLTs can lead to the centralization of decision-making power, thus defeating the purpose of building a decentralized network. In this article, we introduce Healthor, a novel heterogeneity-aware flow-control mechanism for permissionless reputation-based DLTs. Healthor formalizes node heterogeneity by defining a health value as a function of its incoming message queue occupancy. We show that health signals can be used effectively by neighboring nodes to dynamically flow control messages while maintaining high decentralization. We perform extensive simulations, and show a 23% increase in throughput, a 76% decrease in latency and four times increased node participation in consensus compared to state-of-the-art. To the best of our knowledge, Healthor is the first system to systematically explore the ramifications of heterogeneity on DLTs and proposes a dynamic, heterogeneity-aware flow control. Healthor’s source code ( https://github.com/jonastheis/healthor ) and simulation result data set ( https://zenodo.org/record/4573698 ) are both publicly available.

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The Unspent Transaction Output (UTXO) model is commonly used in the field of Distributed Ledger Technology (DLT) to transfer value between participants. One of its advantages is that it allows parallel processing of transactions, as independent transactions can be added in any order. This property of order invariance and parallelisability has potential benefits in terms of scalability. However, since the UTXO Ledger is an append-only data structure, this advantage is compromised through the presence of conflicting transactions. We propose an extended UTXO Ledger model that optimistically updates the ledger and keeps track of the dependencies of the possible conflicts. In the presence of a conflict resolution mechanism, we propose a method to reduce the extended ledger back to a consistent UTXO Ledger.