Before crypto, everything was working on a Centralized Model. Instagram, Amazon, Netflix, and all other applications follow this centralized infrastructure. However, after Bitcoin popularized the concept and benefits of Decentralization, the tech industry started exploring ways to involve more of it in their projects and work.
One such way came out as dApp.
What are dApps? How are they different? Where can you find them?
We have a lot to unpack about dApps that we will do in this blog. So, let's begin.
What are dApps?
dApp stands for Decentralized Application. A dApp acts like a general application but runs on blockchain technology and smart contracts. And since blockchain technology is decentralized, these apps are called Decentralized or dApps.
Centralized applications like Twitter or Instagram run on a computer system owned by an organization or person. It means that regardless of multiple users on one side, a single organization controls these apps at the backend. However, dApps are different. They run on a distributed decentralized blockchain network. Multiple participants manage these platforms together. Even the developers of dApp platforms do not necessarily have any rights or privileges over DApps once these are created. One can build dApps for many functions like social media, gaming, decentralized finance (DeFi), browsing, etc.
Origin of dApps
Even though Bitcoin was the first cryptocurrency based on blockchain technology, it has some limitations in terms of uses and functionality.
Then came the Ethereum (ETH) in 2013, to allow developers to build dApps by introducing smart contracts, which are each a set of immutable rules and conditions. CryptoKitties was a popular dApp built on the Ethereum blockchain.
Key Features of a dApp
Here are the standard features that usually classify a project as dApp.
- dApps have open source codes controllable by their users instead of any single party or person. It also means that any significant change in the dApp will be implemented if it gets the majority of votes from its users.
- Transparency is another impressive feature of dApps. All their data, records, and information should be publicly available.
- Generally, dApps have a cryptographic token that helps them to reward users, contributors, developers and other participants.
- Since dApps have a blockchain and a token, they also must have a consensus mechanism to balance the supply and demand of their native tokens.
How do dApps work?
Developers create smart contracts for a dApp. Then they deploy these smart contracts in a blockchain of the decentralized application (dApp). All these codes are open-source codes, meaning that dApp users can decide on any change in them instead of a single governing authority. The codes are available to all users for evaluating the dApp. When it comes to the workload, it is spread across a network of computers owned by the dApp users.
While the front end of dApps looks similar to apps (applications), the codes are different because of their decentralized structure. These codes make sure that no single authority will control these dApps. Unlike Centralized systems, where a single computer system stores all app and user data, dApps store data in distributed locations as blocks with cryptographic security.
Types of dApps
There are mainly three types of dApps which are as follows:
Type-1
These are those dApps that use their blockchain. Bitcoin is an example of this type of dApps because all its transactions are visible to everyone and work on an open-source code. It also operates without any control of a centralized authority.
Another famous example of Type-1 dApps is Ethereum.
Type-2
dApps that do not have their blockchain and operate on another blockchain fall in this category. They have their native token to function but use other blockchains to function.
An example of such a blockchain is Golem dApp which works on Ethereum and has a native token named GNT.
Type-3
These dApp types use the protocols of Type-2 dApps. For example, the SAFE network is a Type-3 dApp that depends on OmniLayer, a Type-2 dApp, to release its native cryptocurrency, Safecoin. SAFE Network uses this currency to carry out all the operations and functions.
Platforms to Build dApps
The famous platforms for building dApps are:
Ethereum
Ethereum is the most preferred dApp-building platform right now. More than 2500+ dApps have been developed on it. The key reason behind most developers preferring Ethereum for building dApps is that its development interface reduces the programming time and effort. Low transaction speed and high fees were some issues associated with Ethereum. But its recent upgrade from the PoW consensus mechanism to PoS will ward off these drawbacks to a very extent. However, this upgrade has to prove its efficiency to attract dApp developers and keep Ethereum superior to its competitors.
Tron
Tron is another famous dApp-building platform in the crypto industry. Its blockchain can handle almost 2000 transactions per second (TPS) which is very high compared to Bitcoin and Ethereum (before its upgrade). It is compatible with Ethereum and hence allows Ethereum smart contracts to run in its blockchain. However, it uses a special consensus algorithm called Delegated proof of stake, which makes it a bit centralized.
Polygon
As many of you may know, Polygon provides a layer-2 scaling solution for Ethereum. It uses the technology of Ethereum and gives more value to it. As a result, Polygon Network offers higher speed and lower cost than Ethereum. With all the improvements, Polygon has been a great hit among the dApp community. More and more dApps are being developed on Polygon, making it a trustworthy player in the crypto industry.
Other than these platforms, Solana, Avalanche, EOS, and BNB are popular for dApp developers.
Some Popular dApps
OpenSea
Opensea is one of the largest NFT marketplaces that allow peer-to-peer digital art and collectables transactions.
PancakeSwap
PancakeSwap is a decentralized exchange launched in 2020. It has a native token called CAKE which has various functions in its ecosystem. This platform is famous for its lower fees and faster transactions.
Axie Infinity
Axie Infinity is a blockchain-based Play-to-Earn gaming application with digital creatures called Axies battling against each other. It is a popular choice for gamers and NFT collectors.
Benefits of dApps
Like any other decentralized product, dApp (Decentralized apps) is also censorship resistant. Hence, no single individual or government can take dApps down or restrict their access.
- Since dApps distribute their data and control among many participants, they do not have a single point of failure. It makes it very difficult for hackers or scammers to breach a dApp ecosystem.
- dApps have open-source codes that provide transparent and inclusive development.
- DApps work through smart contracts instead of humans. Therefore, they make unbiased and exact decisions.
Drawbacks of dApps
- dApp industry is still in its early stage and has yet to succeed in establishing an easy-to-use interface.
- Though many dApp development platforms are available, none has established itself as the perfect choice. Transaction speed, high cost, and limited features are fundamental problems that need work to make dApps scalable.
Conclusion
DApps are decentralized platforms that act similarly to existing applications but have a completely different working infrastructure. They follow a decentralized approach to data storage, functioning, and decision-making. Unlike centralized systems, dApps do not have a single point of failure. They allow their users and developers to participate in their upgrades and changes. The past few years have been tremendously well for the dApp industry. Soon dApps might launch better alternatives for every application we use.
