New technology might improve network’s decentralization and solve numerous issues
Cardano’s EUTXO model sets the network apart from blockchains like Ethereum because all transactions are parallel to each other, which is why there are a fair share of difficulties for dApps, and solutions like transaction chains to address those issues are here. Huh.
At first, decentralized Cardano applications like Minswap or SundaeSwap used the “batching” solution, where off-chain sequencers aggregated a number of UTXOs prior to submitting them on chain and executing. While this solution indeed solves a series of issues tied to the eUTXO model, it brings numerous risks like centralization, custodiality and batcher executable value, which can be used for sandwich attacks on users.
transaction chain
The new solution adds another vertical where UTXOs are not batched off-chain, but ordered virtually in a “first-come-first-served” manner. The transaction chain works in a public and visible manner in a decentralized manner. Anyone can access the chain without limiting who can consume which UTXO.
Additionally, transaction chaining adds another vertical that decreases latency in the processing of orders. The application assumes that orders will make it on-chain and will be reverted without any loss if something goes wrong.
First and foremost, transactions are submitted to the mempool, which verifies its correctness. After this happens, the user’s transactions are tied to a special UTXO, which protects the users’ transaction and rolls it back if something goes wrong.
Essentially, the new solution may solve most problems Cardano-based DEXs and other decentralized applications are facing today, which is extremely relevant while the project’s biggest competitor, Ethereum, is facing potential regulatory issues after switching to a PoS consensus algorithm.
