diff --git a/blockdag/blockset.go b/blockdag/blockset.go
index 561d5f3dd..b62d754d7 100644
--- a/blockdag/blockset.go
+++ b/blockdag/blockset.go
@@ -115,7 +115,7 @@ func (bs blockSet) hashes() []daghash.Hash {
 }
 
 // first returns the first block in this set or nil if this set is empty.
-func (bs blockSet) first() *blockNode {
+func (bs blockSet) first() *blockNode { //TODO: (Ori) This is wrong. Done only for compilation. We should probably get rid of this method
 	for _, block := range bs {
 		return block
 	}
diff --git a/blockdag/dag_test.go b/blockdag/dag_test.go
index e6e034a6b..c0d03b68d 100644
--- a/blockdag/dag_test.go
+++ b/blockdag/dag_test.go
@@ -9,11 +9,12 @@ import (
 	"testing"
 	"time"
 
+	"math/rand"
+
 	"github.com/daglabs/btcd/dagconfig"
 	"github.com/daglabs/btcd/dagconfig/daghash"
 	"github.com/daglabs/btcd/wire"
 	"github.com/daglabs/btcutil"
-	"math/rand"
 )
 
 // TestHaveBlock tests the HaveBlock API to ensure proper functionality.
diff --git a/blockdag/dagio.go b/blockdag/dagio.go
index b69b1f5ed..d5da742ff 100644
--- a/blockdag/dagio.go
+++ b/blockdag/dagio.go
@@ -999,10 +999,7 @@ func (dag *BlockDAG) initDAGState() error {
 				return err
 			}
 
-			// Determine the parent block node. Since we iterate block headers
-			// in order of height, if the blocks are mostly linear there is a
-			// very good chance the previous header processed is the parent.
-			var parent *blockNode
+			parents := newSet()
 			if lastNode == nil {
 				blockHash := header.BlockHash()
 				if !blockHash.IsEqual(dag.dagParams.GenesisHash) {
@@ -1010,23 +1007,25 @@ func (dag *BlockDAG) initDAGState() error {
 						"first entry in block index to be genesis block, "+
 						"found %s", blockHash))
 				}
-			} else if *header.SelectedPrevBlock() == lastNode.hash {
-				// Since we iterate block headers in order of height, if the
-				// blocks are mostly linear there is a very good chance the
-				// previous header processed is the parent.
-				parent = lastNode
 			} else {
-				parent = dag.index.LookupNode(header.SelectedPrevBlock())
-				if parent == nil {
+				for _, hash := range header.PrevBlocks {
+					parent := dag.index.LookupNode(&hash)
+					if parent == nil {
+						return AssertError(fmt.Sprintf("initDAGState: Could "+
+							"not find parent %s for block %s", hash, header.BlockHash()))
+					}
+					parents.add(parent)
+				}
+				if len(parents) == 0 {
 					return AssertError(fmt.Sprintf("initDAGState: Could "+
-						"not find parent for block %s", header.BlockHash()))
+						"not find any parent for block %s", header.BlockHash()))
 				}
 			}
 
 			// Initialize the block node for the block, connect it,
 			// and add it to the block index.
 			node := &blockNodes[i]
-			initBlockNode(node, header, setFromSlice(parent), dag.dagParams.K) // TODO: (Stas) This is wrong. Modified only to satisfy compilation.
+			initBlockNode(node, header, parents, dag.dagParams.K)
 			node.status = status
 			dag.index.addNode(node)
 
diff --git a/blockdag/dagio_test.go b/blockdag/dagio_test.go
index d790cfa1f..92ab494ee 100644
--- a/blockdag/dagio_test.go
+++ b/blockdag/dagio_test.go
@@ -11,9 +11,9 @@ import (
 	"reflect"
 	"testing"
 
+	"github.com/daglabs/btcd/dagconfig/daghash"
 	"github.com/daglabs/btcd/database"
 	"github.com/daglabs/btcd/wire"
-	"github.com/daglabs/btcd/dagconfig/daghash"
 )
 
 // TestErrNotInDAG ensures the functions related to errNotInDAG work