Decentralized applications or dApps are defined as digital programs or applications that reside as well as operate on a P2P network of computers. Having said that, they are outside the reach and management of a single authority.
Usually based on the Ethereum platform, dApps are used for a number of purposes. The data and records related to a decentralized app are public and their network is protected via a cryptographic token.
How do dApps run?
Though dApps are quite complicated, let us take a few minutes to simplify the working of dApps.
Decentralized applications are based on backend code, usually a smart contract. The smart contract assists in laying the actions that are a must to operate dApp based on the smart contract’s terms and conditions. The transaction or action executes in the peer-to-peer network if the needed requirements are met. The information is recorded as well as kept on the blockchain. However, decentralized actions are offset followed by the system coming back to the initial state if the requirements are not met.
Uses of dApps
Decentralized apps have uses that are even more than you know. Some of them are:
Financial services
P2P transactions like transferring assets or exchanging currencies can be facilitated by using dApps.
Real estate
Real estate related purchase and selling between buyers and sellers can be managed easily with dApps. Property ownership tracking and associated documentation are other uses.
Education
When it comes to developing decentralized learning platforms for direct interaction between students and teachers, dApps are quite useful.
Supply chain management
Movement of goods can be tracked easily with responsibility and transparency through dApps.
Social media
Decentralized social media platforms can be created with dApps; thereby, enabling users to engage and share content without depending on any central authority.
Healthcare
Storing and tracking healthcare records is another great use of dApps. Managing the interaction and partnerships of healthcare experts can be done as well.
Predictive markets
Decentralized portals for predictive markets can be created using dApps. This enables users to speculate several topics and win rewards if their predictions are correct.
Identity verification
Storing and confirming the identity details can be done smoothly with dApps. This includes matters like passport applications and voting systems.
DApps in various industries
dApps are are a major part of a number of industries such as:
Finance
Borrowers and lenders can do business by using dApps. Lenders can earn 100% interest owing to no involvement of any intermediary. Also, they can have increased authority on loans and win tokens from the platform they lend on.
In terms of borrowers, certain platforms enable them to have months or years to pay their interest. Moreover, they can communicate with lenders and come to a decision that suits both parties.
Thanks to the smart contract technology, proceeds take place instantly without involving third parties or lawyers.
Social media
Social media dApps provide freedom of speech and eliminate censorship issues. However, if a post looks problematic, it can be removed if the community votes against it.
Coming to influencers, as they are largely dependent on social media channels, they have the opportunities to earn more. Social media dApps may have a tipping system via a token. That being said, users can run ads and get great payments.
Gaming
It is among the most interesting use cases of dApps. For example, in CryptoKitties, players own a tokenized asset, which is a cat. The cat evolves as the time goes on, which increases its prices if it is raised properly. It could be sold by the user for the amount they want to sell it for.
Some cats can breed with other cats which leads to the birth of exclusive and extremely valuable cats, which can be traded or collected by players who can then do anything they like.
Voting and governance
With dApps, the community can easily vote on various proposals. After this, they can schedule a time frame to allow users to stake votes using tokens. This allows everyone to participate and vote anonymously.
These votes are kept in a decentralized network, which makes it impossible to damage them. Furthermore, voters can be rewarded for their contribution.
Advantages and disadvantages of dApps
While learning about decentralized applications, knowing the advantages and disadvantages related to it are helpful to form wise decisions. Let’s begin with the good side first.
Advantages
- One of the major benefits of dApps is based on user privacy. Users are not required to share their personal details to utilize the app’s functions.
- Smart contracts are used by dApps for the purpose of transaction between two anonymous parties without any central entity.
- dApps are safe from censorship as it is not possible for any one participant on the blockchain to either block or delete any message from being posted.
- Open-source decentralized applications boost dApp ecosystem’s development, which allows developers to create even better decentralized applications and integrate interesting and more useful functions.
Let us take a look at the negative side now.
Disadvantages
- Certain questions such as whether the applications will scale as expected, especially if they need computations, as it over burdens a network and results in congestion, are major concerns.
- Another concern is the potential to create a user-friendly interface. Since centralized apps have a smooth interface, convincing people to move towards dApps isn’t possible without end-user experience and performance that gives a fight to renowned programs.
- Challenges related to code modifications are other major issues. Once a decentralized app is deployed, it requires changes to fix bugs, do enhancements and resolve security related risks.
- Developers may have to face a tough time to make updates since the data as well as code are complicated to edit on the blockchain.
Examples of decentralized apps
- One of the best known dApps is Peepeth, which is considered an alternative to Twitter.
- Aave is a very popular dApp in the world of decentralized finance. An open-source liquidity platform, it is known to provide 100% transparency to users. Users can borrow, lend, stake and earn interest on deposits.
- Minds is a decentralized app social media portal that works on open-source code and has the ability to encrypt the personal information shared by users.
- Pancake Swap is another dApp and uses the Binance Smart Chain ecosystem besides allowing the swapping of a BEP 20 token.
- TraceDonate is supported by blockchain and is a donation platform known for overall transparency.
- Golem is a decentralized marketplace that works to compute power. It has a network of nodes that execute the protocol of the Golem network.
dApp are prone to scams
Decentralized applications are open to scams. According to DappRadar, $1.2 billion was stolen in exploits and hacks during the first quarter of 2022.
Poly Network was hacked for $611 million in August 2021. In March 2022, Ronin bridge became the victim of a more than $500 million hack.
What are Ethereum dApps?
Ethereum decentralized applications are backed and created through the Ethereum platform, as the name implies. These apps utilize smart contracts and use the blockchain of the platform to store data.
Some of the popular dApps based on Ethereum include:
Uniswap
A decentralized exchange that lets users swap tokens P2P.
Audius
It is a decentralized platform to stream music.
Gods Unchained
This one is a card game backed by NFT.
Compound
A decentralized finance lending platform.
PoolTogether
It allows users to stake crypto in lottery pools and win money.
Decentraland
A metaverse platform that allows users to engage like avatars and purchase non-fungible tokens that represent virtual land or objects.
LooksRare
It is a popular NFT marketplace that is known for rewarding users for participating.
MakerDAO
It is a smart contract that lets users engage with the ecosystem of Dai stablecoin.
A new meaning to business
dApps’ decentralization has given new ways to conduct business. For instance, Augur is a great example and refers to a decentralized betting marketplace.
The marketplace was created by creators and was launched by them as well. Currently, its users maintain it and the creators work on separate projects.
Future of dApps
Though dApps are new in the world of technological advancement, they have earned growth and have evolved simultaneously. They are now a part of many industries and have various advantages as mentioned above.
Companies have started to lean on blockchain solutions which indicates a jump in the popularity of dApps. In the coming time, there are possibilities of more stablecoins. And if they increase, developers will develop more decentralized applications based on stablecoins.
For those who are drawn towards digital ownership, dApps will always be attractive. However, dApps have setbacks too like network congestion.
FAQs
Stock exchange dApps enable users to trade market shares. For each transaction fee that’s involved in a stock exchange, investors earn a predefined amount. This returns major revenue to not only investors but to businesses related to exchange dApps.
Yes, Bitcoin is a decentralized application. It is distributed owing to its timestamped public ledger, i.e. the blockchain, is located on various computers. Another factor that makes it decentralized is that if a node fails, it doesn’t affect the network since it still operates.
dApps function without human involvement and are not acquired by a single entity. Instead, they distribute tokens that display holding and are distributed on to the system of a user based on a programmed algorithm. This way, the ownership and authority of the decentralized apps are curbed.
Etherum is the best blockchain to create dApps, as the blockchain provides quick application scaling along with smart contracts support. Developers are offered an exclusive software to create dApps Ethereum which also includes Solidity, its custom programming language called Solidity and EVM.
MetaMask is the most common crypto wallet that helps in terms of accessing dApps. Among the most used cryptocurrency wallets, it supports linking a browser to Ethereum, which then helps to access dApps based on the Ethereum blockchain.
- SEO Powered Content & PR Distribution. Get Amplified Today.
- Platoblockchain. Web3 Metaverse Intelligence. Knowledge Amplified. Access Here.
- Source: https://investorbites.com/what-is-dapp/
