Decentralized applications are a radical new way of building applications. But will anyone use them?
By Matt Hussey and Scott Chipolina 7 min read Oct 1, 2020 Source
It’s time to cut out the middleman. Why pay for a company to provide a ride-sharing service when you could use an app that connects you to the riders and doesn’t take a cut? That’s the promise being offered by Dapps, or decentralized apps.
Below we’ll give you an overview of what they are, how they work, and some of the challenges these new types of applications face.
What is a dapp (decentralized application)?
Dapps are decentralized apps. They are like normal apps, and offer similar functions, but the key difference is they are run on a peer-to-peer network, such as a blockchain.
That means no one person or entity has control of the network. There are other key features, such as:
- 🖧 It must be open-source and operate on its own without anyone entity controlling it.
- 🔍 Its data and records must be public.
- 🟡 It must use a cryptographic token to help keep the network secure.
While these are beliefs many in the blockchain and crypto community think should be upheld, as the industry has matured, there are dapps that use some, a combination of, or none of the above features. More on that below.
What are the benefits of dapps?
Dapps have several exciting aspects:
- Censorship-resistant–With no single point of failure, it’s very difficult for governments or powerful individuals to control the network.
- No downtime–Relying on a peer-to-peer system ensures the dapps continue to work even if individual computers or parts of the network go down.
- Blockchain-based–As they are made of smart contracts, they can easily integrate cryptocurrencies into the basic functionalities of the Dapp.
- Open-source–This encourages the widespread development of the dapp ecosystem enabling developers to build better dapps with more useful or interesting functions.
Dapps are decentralized apps. They are like normal apps, and offer similar functions, but the key difference is, they are run on a peer-to-peer network, such as a blockchain.
What are the weaknesses of dapps?
While Dapps promise to remedy a lot of the key issues faced by regular apps, they do have their downside.
- Hacks–As many are run on open-source smart contracts, it allows hackers the rare opportunity to probe the networks looking for weaknesses. This has led to a spate of hacks on popular Dapps.
- Usability–A lot of Dapps have poor user-interfaces, which have put a lot of users off–you can read all our reviews on these services on our reviews page. But, we believe, this is something that’s improving as time goes on.
- Users–Like many apps in Web 2.0, the more users a Dapp has, the more effective the network is at delivering those services. This is often referred to as the network effect. Dapps struggle from low user numbers, which can make them less interactive. It can also make them less secure, as a Dapp’s security can often rely on how many users it has.
What dapps are out there?
A great place to start is State Of The Dapps, a website that lists more than 2,000 dapps built on networks including Ethereum, EOS, Tron and NEO. The most popular dapps at present are decentralized crypto exchanges, or DEXs. These enable people to swap one cryptocurrency for another without the need for a centralized gatekeeper like you’d find on exchanges like Binance, and Coinbase. You can read more about decentralized exchanges in our complete guide to decentralized finance.
Let’s break these most popular dapps down further.
The Best Ethereum Dapps
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Making the top of the list on State of the Dapps is MakerDAO, a smart contract that allows users to interact with the Dai Stablecoin System. At the time of writing, MakerDAO commands over 5,000 daily users, and the DeFi Pulse website says MakerDAO has $1.9 billion of total value locked in. Far from something to sneer at.
Then there’s Uniswap, which swaps places with MakerDAO for first and second place on State of the Dapps and Defi Pulse respectively. Commanding over $2 billion of total value locked in, the automated token exchange protocol is currently retaining over 3,000 daily users on State of the Dapps.
The Best Tron Dapps
Gaming dominates the Tron Dapps space. The IOI game, the world’s first real-time crypto trading game, is leading all Tron Dapps with over 1,400 daily users at the time of writing. Coming in third is another gaming dapp, called the ECO Game Center. With over 100 current daily users, this game takes a unique approach to smart contracts in online gaming, giving players an opportunity to generate income.