On the Resilience of DAG-Based Distributed Ledgers in IoT Applications

Abstract

Distributed ledgers have been proposed for a number of applications in the Internet-of-Things domain where it is essential to have an immutable and irreversible record of transactions. Directed acyclic graph (DAG)-based architectures, in particular, seem to provide a vast array of advantages over the more traditional Blockchain; however, it can be challenging to conduct a thorough analysis of DAG-based ledgers and derive reliable performance guarantees. In this article, we analyze one commonly discussed attack scenario known as the parasite chain attack, which aims at disrupting the immutability and irreversibility of the ledger, in the context of the IOTA Foundation's DAG-based system. Using a Markov chain model, we study the vulnerabilities of IOTA's core tip selection method against this attack and we present an extension of the algorithm to improve the resilience of the ledger in this scenario.