What Are Decentralized Apps (DApps)?

Decentralized Apps (DApps)

Applications have become a staple in our daily lives, as our computers and smartphones are filled with them. Although applications have been around for decades, the first decentralized app or DApp debuted only in 2009. This DApp is known as Bitcoin. What makes DApps different than traditional, centralized apps is that they are built on blockchain technology. Continue reading to find out more about DApps, how they work, their benefits, and some examples.

What are DApps?

Decentralized apps, also known as DApps, are software applications that typically run autonomously on open-source, peer-to-peer, public blockchain networks. DApps provide the same functionalities as popular consumer applications and can be developed for nearly any real-world use case.

However, since DApps do not depend on centralized frameworks, they forgo the concept of a single entity owning the app. Instead, ownership is diluted into multiple tokens that live on the blockchain via distributed ledger technologies. Lastly, DApps combine front-end user interfaces with smart contracts.

Understanding DApps

Centralized Apps

Conventional digital applications are used for countless functions, including financial services and emails, to dating and food delivery. Centralized apps often combine a front-end user interface with codes executing from a back-end server or a cluster of servers. These apps are operated by a single company and must follow regulations imposed by governments and regional authorities.

Centralized apps are offered via distribution platforms and marketplaces like app stores. When users download these apps, a copy of the executable code is pushed to their device, typically smartphones or tablets. The device then interacts with the app’s back-end servers to provide the required functionalities. Lastly, while consumers offer varying quantities of data to each app, the ownership of the collected data and app belongs to the developers and publishers.

Some of the most popular centralized apps include Facebook, Google, Netflix, Amazon, and TikTok. They all run from a centralized server stack from their parent company and operate within geopolitical regulatory limits.

DApps

While DApps often provide the same front-end user experience as their centralized counterparts, their user interface is built on smart contracts. These smart contracts are standalone pieces of code that live and run on the decentralized, peer-to-peer, public blockchain network.

The logic written in the smart contracts determines a DApp’s functionalities instead of code written by an individual or a company. The ownership for DApps is shared, meaning no single person or group owns them. When downloading a DApp, consumers pay a small fee using cryptocurrency directly to the developer and receive a smart contract in return.

Most DApps run on the Ethereum platform. Examples of top DApps include BitTorrent, Audius, Metamask, Augur, Golem, and Gnosis.

DApps Pros

  • DApps do not run on central servers or networks but are instead distributed over blockchain networks. This means DApps are not owned by a single person, entity, or organization.
  • DApps utilize open-source codes and APIs in smart contracts. This allows the codes to be inspected by anyone, unlike the black-boxed proprietary codes created by centralized applications like Facebook and Twitter.
  • Since DApps are not deployed out of a singular node or a cluster of centralized nodes, they are immune to common hacking or data breach attempts.
  • DApps do away with regulatory bottlenecks imposed by central regulatory agencies or authorities. This allows DApps to perform at faster speeds than centralized apps.

DApps Cons

  • DApps run on niche technologies like blockchain and cryptocurrencies. The lack of mainstream adoption makes developing DApps much more expensive and cumbersome.
  • The rollouts for DApps lack centralized supervision, making bug tracking and fixing more challenging than conventional applications.
  • DApps have a considerable performance overhead, and scaling is more complicated than centralized apps.

Examples of DApps

Here are some popular blockchain DApps today:

  • PancakeSwap provides a decentralized currency exchange built on Binance Smart Chain. With a circulating supply of 248 million CAKE tokens, the market cap for PancakeSwap sits at $2.7 Billion. This DApp offers significantly lower crypto exchange fees.
  • CryptoMines is an NFT-based game built on the Binance network. Users in this SciFi play-to-earn game traverse through the metaverse in search for ETERNAL, a mineral that allows them to live another day and make profits. The ETERNAL tokens and NFTs mined in the game can be exchanged for real money.
  • Chainlink is a secure middleware that promotes an open standard for secure, decentralized data inputs. It essentially works as an ‘oracle system’ for validating data from external feeds. Chainlink has become so popular that Google is testing it as an intermediary for their BigQuery data warehouse, a PaaS (Platform-as-a-Service).
  • Gnosis and Augur are decentralized market platforms with built-in forecasting tools that help predict trade benefits. Both DApps utilize real-world event predicting mechanisms like “Wisdom of the World” and ERC20 tokens.
  • Brave is a free internet browser with more than nine million active users. The Brave browser aims to create a blockchain-based digital advertising and services platform to give information control and privacy back to users. It utilizes Google’s open-source Chromium engine.

The tech industry is beginning to heavily invest in DApps, with multiple corporations like Meta, Google, and Microsoft announcing their interest in the emerging technology. Furthermore, DeFi also played a significant role in the increasing interest in DApps. While Bitcoin was technically the first DApp, recent developments have primarily been driven by the Ethereum platform. As investors and the public become increasingly knowledgeable and comfortable with the technology, DApp development and adoption will continue to grow.

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