Beyond the Scalability Trilemma: BlockDAG to Hyperscale DeFi, and Social AI By Steven Pu, Co-Founder of Taraxa

Integrating BlockDAG technology into traditional blockchain architecture is essential for a scalability push in AI-driven developments.

Ties between AI and blockchain continue to strengthen, once again testing our ability to build scalable networks. AI agents can now trade, mint new tokens, and push promo campaigns, creating new economies from scratch. As more users flock to this brave new world, unseen demand for network resources is just around the corner. This pushes us to rethink the ways we approach scalability. 

The blockchain trilemma is still there: a more scalable chain is often less decentralized or secure. This suggests we should look outside blockchain architecture to resolve it. BlockDAG, a technology that puts blocks in a branched graph rather than a single chain, introduces scaling without sacrifices — a feat no other architecture has fully achieved. Present since 2018 and showing up on radars again in 2025, it promises a new leap in scalable network building and a massive push for AI-driven crypto adoption.

Overcoming the Trilemma

Blockchain developers have addressed the scalability problem many times, but it’s ingrained in the very nature of blockchain. Take Bitcoin: you can’t just increase block size or frequency to increase throughput. This would amplify alternative (“orphaned”) blocks, and miners would need to put immense effort into cutting them — all to stick to a single chain. 

In 2017, the crypto world was hit by a massive influx of new users. People playing CryptoKitties pushed Ethereum gas fees to $50, highlighting obvious scalability limitations. That’s when blockchain researchers Yonatan Sompolinsky and Dr. Aviv Zohar published a paper describing their invention, BlockDAG (directed acyclic graph).

The technology proposed a “cure” for the security-scalability-decentralization tradeoff. Instead of cutting orphan blocks, BlockDAG incorporates them into an intertwined network — so miners add many blocks at once, thus raising throughput without harming security. 

The first experiments with the DAG structure date back to the mid-2010s and include IOTA, Nano, Fantom, Kaspa, and other projects that included graph elements or were built on DAG completely. They became the first real-world examples to prove: graph structure helps improve scalability, decentralization, and security all at the same time. 

BlockDAG Revival: Why Now? 

Over the past few years, the scaling efforts have shifted toward classic L1s and L2s, but BlockDAG innovation never slowed down. These developments are now bearing fruit, bringing BlockDAG back into the public eye. Kaspa plans to boost its block production rate by 10X, up to 10 blocks per second. The technology now also runs on an EVM-compatible PoS blockchain. 

BlockDAG demonstrates its ability to drive fast-paced and diverse ecosystems at a critical moment for the industry. Every time there’s a new wave of crypto users, the market discovers new infrastructural flaws. The 2024 memecoin frenzy and AI boom caused delays in networks that were supposedly designed to solve the scalability problem. The year was marked by outages in Solana and TON that were directly caused by the intensified load on blockchains. 

The thing is, the main boom isn’t even there yet. AI agents are taking on crypto operations  — and are doing it increasingly well. Fueled by crypto, use cases like AI-driven trading or content creation might attract millions and spark unseen demand for high-throughput smart contract platforms. 

In the meantime, keeping these platforms decentralized feels more important than ever. When AI agents have the power to move our funds at lightning speed, we don’t want them — or the corporations behind them — to control our assets. 

Even traditional financial institutions now support this push for decentralization. For years, they insisted on permissioned, private networks, believing decentralization was a burden because one can’t control its policies and operations. However, this mindset has been reversed. Institutions now recognize the benefits of decentralized networks, including their censorship resistance. As they embrace blockchain, L1 security has become even more important, and architectures that trade security for speed are not an option anymore. 

BlockDAG is one of the very few technologies that ‘win’ the blockchain trilemma — none of the three factors need a compromise when building a chain. In graphs, nodes add new blocks in parallel whenever they are valid, boosting scalability; the system has no restrictions on node count or the cost of running one, safeguarding decentralization and securing from 51% attacks. 

Finally, BlockDAG simply eliminates many weak points of traditional blockchains that attackers, especially AI-driven ones, can exploit. It adds transactions to the graph almost instantly; there’s no one single chain and no lengthy mempools. Intruders simply don’t have room to manipulate transaction order, run front-running attacks, or attempt malicious hardforks. 

The Future of Blockchain?

BlockDAG has been present in several L1 networks from the start, but it can also be used in existing blockchains, including L2s. Parallel block processing in major smart contract platforms would enhance the entire industry’s performance — something we need so much ahead of the new AI-driven crypto adoption cycle.

Throughout 2025, market players might find out that “traditional” scaling methods are not enough anymore. Without addressing the trilemma, networks risk falling short in terms of user experience, security, and overall viability. At that moment, applying BlockDAG’s benefits will become more than just an opportunity. Growing congestion issues could push builders to embrace BlockDAG — otherwise, facing the risk of losing a competitive edge.