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Tangle Iota Blockchain Ledger DAG

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B. Kusmierz

IOTA Foundation

November 6, 2017

Abstract

In this paper we present preliminary results obtained with the computer simulation of the

Tangle - directed acyclic graph adapted for decentralized information storage. The first scalable,

permissionless distributed ledger to use this technology is IOTA. IOTA protocol is designed

for Internet of Things, Web 3.0 and other applicable sectors where the standard blockchain

architecture comes up short. We examine basic properties of the Tangle, this include analysis of

cumulative weight and stability of tips number, for different tip selection mechanisms.

1 Introduction

Todays constant internet connection is a fact and smart devices are becoming more and more

popular. This brings a need for development of protocol for Internet of Things (IOT). In order

to make such network function properly it needs convenient payment system and rapidly growing

cryptocurrencies seem to be a natural candidate. No doubt cryptocurrencies are one of the most

innovative and disruptive inventions of the last decade. However, the vast majority of them are

based on blockchain technology which has some flaws, especially noticeable within the IOT industry.

What makes blockchain based payment system hard to implement in all smart devices are scalability

issues. Constant growth of transaction fees is major obstacle in establishing true micropayments.

One of the solutions to this problem could be an increase of block size or decrease of time between

blocks. However such move brings need for more storage space and that might threaten the very idea

of trustless peer-to-peer cryptocurrency. Satoshi Nakamoto [1] wanted a radical decentralization of

the proposed payment system. Requirement of large storage space might concentrate full nodes

in the hands of the few richest people. Another characteristic of standard blockchain not suited

for IOT industry is the division of users into two groups: those who issue transactions, and those

who approve transactions (miners). Both groups have fundamentally different goals and roles.

Blockchain scalability issues are intensively studied and there are variety of promising solutions

like the lightning networks [2], proof of stake protocols [3] and novel architecture of DAG (directed

acyclic graphs) also known as the Tangle [4]. The first cryptocurrency-platform based on this

idea is IOTA, developed by the IOTA foundation.

Currently IOTA foundation is developing a computer simulation of the Tangle network. We hope

this tool will improve our understanding of the system and allow us to find optimal parameters for

the smoothest performance. Moreover, we want to study possible attacks on the Tangle. It is our

priority to understand them and find the best methods of protecting against them. As systematic

authors contact information: bartosz.kusmierz@iota.org

1

research progresses we will publish results to the IOTA community. In this paper we present

preliminary results and validate certain results from the Whitepaper [4]. This includes analysis of

cumulative weight and evolution of tips number. In the future we want to share results of more

advanced studies.

2 Methodology

The computer simulation had been based on formalism and algorithms proposed in the Whitepaper

[4], however certain adaptations had to be made. In particular we use the discrete model instead

of the continuous one, explored in Whitepaper. In the future we want to examine simulations of

continuous model as well.

Terminology we use is analogical as in Whitepaper. In order to issue a transaction, users must

directly approve two other transactions. If transaction A directly approves B it is denoted A B.

One says A indirectly approves Z if there is a sequence of length at least three of transactions

satisfying: A B ... Z. The weight of a transaction is proportional to the amount of work

that the issuing node invested into it. In the simulation all of the transactions are assumed to have

the same, constant weight. Very important notion introduced in the Whitepeper is the cumulative

weight of transaction denoted Hx . The cumulative weight is a sum of own weight of a particular

transaction plus the sum of own weights of all transactions that directly or indirectly approve this

transaction.

The fundamental unit of time in the simulation is a time step. During each time step there is

on average transactions issued, exact number is chosen from Poisson distribution Pois(). Each

new transaction approves two older ones. We assume that all of the calculations required for device

to issue a transaction are done within one time step. Two tips selection mechanism are considered:

Tips selection at random - tips are chosen from the list of available tips randomly (uniform

distribution).

MCMC algorithm (Markov Chain Monte Carlo) - random walk of particles towards the tips.

Particles are released in the tangle, first pair of particles at different tips determines transactions

to approve.

In the case of MCMC algorithm we use random walk of 10 particles, starting positions of particles

are chosen randomly (uniform distribution) from transactions issued between 100 and 200 time steps

ago. This mimic release of particles deep in the Tangle. The transition probability Pxy of particle

moving from transaction x to y (y approves x directly, y x) is analogical as in the Whitepaper[4]:

!1

X

Pxy = exp (Hx Hy ) exp ((Hx Hz )) . (1)

z:z x

3 Results

Our analysis revolve around recreation of results obtained in the Whitepaper [4]. We focused on

cumulative weight growth and stability of number of tips L(t). Results are presented in a form of

graphs.

2

3.1 Cumulative weight

Performed simulations confirm findings of the Whitepaper in the matter of cumulative weight

growth. Obtained data strongly suggest existence of two phases of growth: adaptation period

(exponential growth) and linear growth (see figs. 1, 2 and 3). This is the case for both examined

tip selection mechanisms. Behavior analogical to what is observed in figs. 1-3 is typical for almost

all other transactions. The only exceptions are permanent tips. Permanent tips are transactions

that are either approved by negligible number of transactions or not approved whatsoever.

800

cum. wg.

f (x) = ax + b

700 g(x) = exp(cx + d)

Cumulative weight

600

500

400

300

200

100

0

0 5 10 15 20 25

Time step

Figure 1: Cumulative weight of 200th transaction issued during the simulation and the best fitted:

linear and exponent functions (f (x) = ax + b, g(x) = exp(cx + d) respectively). Flow rate of new

transactions: = 50; tip selection algorithm: at random. Linear trend of cumulative weight

continues for large time steps. f (x) had been fitted on an interval [19, 30], g(x) on an interval

[4, 16]. Values of parameters: a = 54.83 0.87, b = 795 21; c = 0.452 0.016, d = 2.69 0.25.

3

900

cum. wg.

800 f (x) = ax + b

g(x) = exp(cx + d)

700

Cumulative weight

600

500

400

300

200

100

0

0 5 10 15 20 25 30

Time step

Figure 2: Cumulative weight of 200th transaction issued during the simulation and the best fitted:

linear and exponent functions (f (x) = ax + b, g(x) = exp(cx + d) respectively). Flow rate of new

transactions: = 50; tip selection algorithm: MCMC random walk of 10 particles towards the tips

for = 0.001. Linear trend of cumulative weight continues for large time steps. f (x) had been

fitted on an interval [22, 30], g(x) on an interval [6, 21]. Values of parameters: a = 49.94 0.40,

b = 981 12; c = 0.3117 0.015, d = 1.96 0.30.

4

800

tr. no.: 200

tr. no.: 400

700 tr. no.: 600

tr. no.: 800

Cumulative weight 600 tr. no.: 1000

500

400

300

200

100

0

0 5 10 15 20 25 30 35 40 45

Time step

Figure 3: Cumulative weight of 200th, 400th, 600th, 800th and 1000th transaction issued during

the simulation. Flow rate of new transactions: = 50; tip selection algorithm: MCMC random

walk of 10 particles towards the tips for = 0.001. Linear trend of cumulative weight continues for

large time steps.

We analyzed number of tips L(t) as a function of the time step. In the case of tip selection at

random, L(t) remains stable on the examined time interval (see fig. 4). Although the number of

tips varies greatly, it fluctuates around an average L0 . What is worth stressing fluctuations seem

to be bounded. The Whitepaper discusses this fact and makes remarks that stochastic process L(t)

should be positive recurrent, in particular probabilities P[L(t) = k] should stabilize as time goes to

infinity. This fact is confirmed by a well-behaved histogram given in a fig 5.

The Whitepaper predicts an average value of tips number L0 . We want to emphasize that data

obtained in the simulation differs from predictions of Whitepaper. The average value of L(t) for data

presented in fig. 4 equals 63.037 = 1.2607. We find this discrepancy to be a result of differences

between continuous and discrete model (used in the Whitepaper and the simulation respectively).

We will explore differences between two models in the future [6].

5

90

85

80

Number of tips

75

70

65

60

55

50

45

40

0 5000 10000 15000 20000

Time step

Figure 4: Values of L(t) - number of the tips (unconfirmed transactions) at any given time step

of the simulation. Flow rate of new transactions: = 50; tip selection algorithm: at random;

simulation involves 106 transactions what corresponds to roughly 20000 time steps (106 /). L(t)

varies grately, but fluctuates around an average.

6

14000

12000

10000

Occurrence

8000

6000

4000

2000

0

30 40 50 60 70 80 90 100

Number of tips

Figure 5: Histogram for values of L(t). Flow rate of new transactions: = 50; tip selection

algorithm: at random; simulation involves 107 transactions.

In the case of MCMC, when parameter is small, L(t) is expected to exhibit similar behavior

as for the tip selection at random. Indeed, fig. 6 shows that on examined time interval, L(t)

seems to be stable. There are theoretical arguments, based on classical results from probability

theory that for any positive , number of tips actually diverges. One can notice that each tip has

nonzero probability of being unapproved for any arbitrarily large, but finite time. However after

certain time, starting positions of particles are placed further than the considered tip and there is

no chance of approving it. Thus each transaction has nonzero probability of becoming permanent

tip and by Borel-Cantelli lemma number of tips will become infinite in the limit of large time[5].

Nonetheless obtained data shows that growth of number of tips is very small, actually unobservable

on examined time interval. On the other hand random walk of particles, when is large should

be concentrated near fixed paths, determined by the highest cumulative weight. Then MCMC

tip selection mechanism no longer resembles tip selection at random and L(t) undergo different

evolution. As simulation suggests in this regime number of tips grows linearly and slope of line can

be significant. Example of such behaviour is given in the fig. 7 ( = 5).

7

110

100

90

Number of tips

80

70

60

50

40

0 5000 10000 15000 20000

Time step

Figure 6: Values of L(t) - number of the tips (unconfirmed transactions) at any given time step of

the simulation. Flow rate of new transactions: = 50; tip selection algorithm: MCMC random

walk of 10 particles towards the tips for = 0.001; simulation involves 106 transactions. L(t) varies

greatly, but fluctuates around an average.

8

2000

1500

Number of tips

1000

500

0

0 5000 10000 15000 20000

Time step

Figure 7: Values of L(t) - number of the tips (unconfirmed transactions) at any given time step of

the simulation. Flow rate of new transactions: = 50; tip selection algorithm: MCMC random

walk of 10 particles towards the tips for = 5; simulation involves 106 transactions. L(t) grows

approximately like linear function of time.

The presented data confirm some of the results obtained analytically in the Whitepaper [4]. Anal-

ysis of the cumulative weight revealed two phases of growth - exponential and linear. Using the

simulation we were able to examine numbers of tips L(t) as a function of time. The presented plot

confirm that in the case of tip selection at random L(t) remains stable. Moreover, we examined

values of L(t) when tip selection is guided by MCMC. For small , L(t) remains stable in examined

t

time interval. Even though analytical evidence indicate L(t) (in the absence of additional

efforts by the users to establish this transaction), we find rate of divergence to be insignificant (see

subsection 3.2 Number of tips). For large values of growth rate of L(t) is significant and follows

linear fashion. We can not confirm findings of the Whitepaper in the matter of average number of

tips L0 . However discrepancies are most probably due to the differences in used models. We are

working on the simulation of the continous model and hope to examine differences between two

models [6].

So far we used the simulations to recreate already known results, however we see wider range

of applications. Simulations can be especially useful when analytical calculations are extremely

hard and can not be performed without strong and unrealistic assumptions/simplifications. What

is important the simulation allows for quantitative analysis of stability of the Tangle for different

parameters and algorithms. We will be able to compare different tip selection mechanisms, proba-

bility transition functions in MCMC and other features [7]. This tool allows us for examination of

different types of attacks on the network like parasite chain attack or influence of lazy tips. In

the future we want to publish our results in more complete form.

9

References

[1] S. Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System,

https://bitcoin.org/bitcoin.pdf (2008)

[2] J. Poon, T. Dryja, The Bitcoin Lightning Network: Scalable Off-Chain Instant Payments

https://lightning.network/lightning-network-paper.pdf (2016)

[3] BitFury Group, Proof of Stake versus Proof of Work: White Paper

http://bitfury.com/content/5-white-papers-research/pos-vs-pow-1.0.2.pdf (2015)

ability theory), Script, Warsaw, sec. ed. (2001)

[7] J. Propp and D. Wilson, Exact sampling with random Markov sampling with applications

to statistical mechanics, Random Structures and Algorithms, vol. 9, pp. 232-252 (1996)

10

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