Decentralized application

A decentralized application (DApp,[1] dApp,[2] Dapp, or dapp) is a computer application that runs on a distributed computing system.

This article is about trustless decentralized applications. For other types of decentralized applications, see Distributed computing.

DApps have been popularized by distributed ledger technologies (DLT) such as the Ethereum Blockchain,[3] where DApps are often referred to as smart contracts.

Characteristics

DApps have their backend code running on a decentralized peer-to-peer network, as opposed to typical applications where the backend code is running on centralized servers. A DApp can have frontend code and user interfaces written in any language that can make calls to its backend. Furthermore, its frontend can be hosted on decentralized storage such as Swarm or IPFS.

DApps are typically open-source, decentralized, incentivized through providing tokens to those who validate the DApp, and in compliance with a specific protocol agreed upon within the community.

DApps may run on top of distributed computing systems such as Ethereum or Bitcoin. Decentralized applications are stored on and executed by a blockchain system.

Steem created a well-established ecosystem that leads to the widespread adoption of DApp development. Examples are Steem Monsters, dMania, Steemblr, Musing, and SteemHunt.

Adoption

From finance to gaming and even online gambling, DApps can be applied to several online industries.

A list of DApps can be found on centralized marketplaces such as State of the DApps, Dapp.com, Holdex, DAppRadar, and CoinGecko.

The Institute of Electrical and Electronics Engineers hosted conferences on DApps in 2019 and 2020.[2]

DeFi DApps

DApps have been utilized in decentralized finance (DeFi), which revolves around dapps that perform financial functions on blockchains, a technology that was invented for Bitcoin but has since caught on more broadly.[4]

DeFi DApps allow users to:

  • Lend or borrow funds from others.
  • Go long or short on a range of assets.
  • Trade coins or earn interest in a savings-like account without a centralized intermediary.[5]

Gambling Dapps

Online gambling is another industry with many popular Dapps, and the potential to grow even further. [6]

Among their many advantages, gambling Dapps allow for faster and smoother transactions, low-cost casino operations that result in a lower house edge for the user, more anonymity, and provable fairness. [7]

Criticisms

There have been criticisms of DApps surrounding their inaccessibility to the average user.

Many DApps struggle to attract users, particularly in their founding stages, and even those that attract widespread initial popularity struggle to retain it.

A notable example was the DApp CryptoKitties, which crashed the Ethereum network at the height of its popularity.[8] CryptoKitties and another similar gaming-based DApp, Dice Games, have failed to attract similar traction since.[9]

Examples
  • Augur[10] - prediction market platform
  • Cryptokitties - game based on the Ethereum.[11] It slowed Ethereum down due to insufficient transaction processing and exposed the scaling limitations of public blockchains.[12]
  • Blockstack - a platform for developing decentralized applications.[13]
  • Freelance - platform on smart contract.
  • Steem - based on blockchain technology, publishers rewarded with crytocurrency.[11]
  • Uniswap - a decentralized cryptocurrency exchange[14]

References
  1. "CVC Money Transmission Services Provided Through Decentralized Applications (DApps)" (PDF). FinCEN. Retrieved 2019-05-09.
  2. "IEEE DAPPS 2020". ieeedapps.net. Archived from the original on 2020-04-26. Retrieved 2020-08-15.
  3. Popper, Nathaniel (1 October 2017). "Understanding Ethereum, Bitcoin's Virtual Cousin (Published 2017)". The New York Times.
  4. "Why 'DeFi' Utopia Would Be Finance Without Financiers: QuickTake". Bloomberg.com. 26 August 2020.
  5. "Why 'DeFi' Utopia Would Be Finance Without Financiers: QuickTake". Bloomberg.com. 26 August 2020.
  6. "Gambling Dapps Explained". CasinosBlockchain.io. 7 December 2020.
  7. "Smart Contract & Crypto Casino Guide". Eth.Casino.
  8. https://techcrunch.com/2017/12/03/people-have-spent-over-1m-buying-virtual-cats-on-the-ethereum-blockchain/
  9. https://www.wsj.com/articles/cryptokitties-and-dice-games-fail-to-lure-users-to-dapps-11559122201
  10. Leising, Matthew (July 26, 2018). "As Crypto Meets Prediction Markets, Regulators Take Notice". Bloomberg.
  11. Cai, Wei; Wang, Zehua; Ernst, Jason B.; Hong, Zhen; Feng, Chen; Leung, Victor C. M. (2018). "Decentralized Applications: The Blockchain-Empowered Software System". IEEE Access. 6: 53019–53033. doi:10.1109/ACCESS.2018.2870644. ISSN 2169-3536.
  12. Kharif, Olga (2017-12-05). "CryptoKitties Mania Overwhelms Ethereum Network's Processing". Bloomberg. Retrieved 2018-08-23.
  13. Corbyn, Zoë (2018-09-08). "Decentralisation: the next big step for the world wide web". The Observer. ISSN 0029-7712. Retrieved 2019-10-06.
  14. "DeFi Boom Makes Uniswap Most Sought-After Crypto Exchange". Bloomberg.com. 16 October 2020.
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