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dApps: definition and types of decentralized applications

31.3.2021
dapps

Bitcoin is a truly genius invention as it has laid the foundation for blockchain technology and has shown the world the possibility to exchange value on a peer-to-peer basis without having to rely on any centralized institutions. However, it has never been able to move anywhere beyond these borders and remains what it has been created to be from the very start, i.e. digital cash. Many developers all around the world have acknowledged the great potential that this new approach carries. Thanks to Bitcoin’s open code, they have pushed the idea further. Now there’s a whole suite of different systems and decentralized applications that provide users with robust functionality. In this article, we are going to review decentralized applications, their key features, and the most popular solutions that provide out-of-the-box environments for their development.

What are dApps?

From the end-user perspective, decentralized applications or dApps don’t differ that much from their traditional centralized alternatives. They usually come with a user-friendly interface and allow performing a specific set of tasks such as creating content, playing online games, or exchanging unique assets.

However, there are some basic aspects that make them fundamentally different. For one, they are intrinsically linked to the underlying blockchain technology with all the consequences such as keeping all the records on a public ledger and using an open-source code. Second, they are fueled by a cryptographic token that contributes to the security of the blockchain network. Finally, they rely on smart contracts that stand in place of centralized entities and govern all activities in an automated way.

What makes blockchain technology special?

Blockchain represents a decentralized database for keeping records. These records are stored in blocks that are linked to each other and validated with the help of cryptography. The blocks are generated by a network of machines that are distributed across different locations and work independently from each other. 

If some malicious parties decided to change or undo any records, they would need to gain access to the majority of blocks which is near to impossible thanks to the distributed nature of the whole network. With that said, decentralized apps that leverage blockchain come with the following set of features.

Features of decentralized applications

  • Secure

Unlike centralized applications that store all records on a single server, dApps keep records of all transactions on a decentralized public ledger (i.e. blockchain). This contributes to data security as conducting the so-called 51% attack, i.e.hacking the majority of blocks that make up the p2p network, is a much more complicated type of task than breaking into a centralized server.

  • Based on the open-source code

Ethereum as well as other popular platforms for decentralized apps’ development are open-source platforms. They are not controlled by any centralized entity and belong to the community that proposes improvements and votes for or against them.

  • Fueled by internal cryptocurrency

In order to conduct any activities, exchange value and initiate smart contracts, users of decentralized apps pay with cryptographic tokens.

Differences between dApps and traditional apps (pros and cons)

DApps’ pros

With everything mentioned above, decentralized applications come with a range of serious benefits. Combined with other modern technologies such as Artificial Intelligence they may seem to be really attractive to many users. These benefits include:

  • 100% uptime. Since blockchain is supported by numerous entities that do not depend on each other, it will continue working even if some of its participants go offline. Thus, applications created on its basis always run as they have been programmed without any downtime.
  • Censorship-resistant. Blockchain is not controlled by a single party which eliminates the single point of failure and contributes to its protection against any governmental bans.
  • Immutability. Transactions verified on-chain cannot be undone which releases the burden for merchants who have to deal with dishonest users requesting refunds.

DApps’ cons

However, there is a flip side to every coin. Decentralized applications come with a few flaws that should be considered as well if you’ve decided to switch your business to the blockchain rails:

  • Fund losses due to hacks or issues in the code. The complexity of the programming languages utilized in decentralized apps may result in issues in the code. Hackers can use these vulnerabilities for their own benefit.
  • Usability. Users of dApps often complain about the poor interface and the lack of convenient functions that they enjoy in centralized alternatives. It depends on a specific dApp as there are lucky exceptions, but the general statistic is not encouraging.
  • A low number of users. In many blockchain-based applications, productivity increases together with the number of users. However, most of dApps still have a long way to go to get to the same level of popularity that centralized platforms have.

However, despite all these drawbacks, decentralized applications have a strong potential as the issues mentioned above can be overcome in time.

Platforms for developing dApps

There are many platforms that provide developers with the tools for creating dApps. Below, we are going to briefly review the most popular options.

  • Ethereum – Ethereum was invented by Vitalik Buterin in 2014 and launched a year later. It was the first decentralized platform that was fueled by the native cryptocurrency ETH and allowed developers to create decentralized applications. Initially running on the Proof-of-Work consensus mechanism, it struggled with scalability issues. The project’s team has made a decision to switch the platform to the Proof-of-stake and the network is in its transformation period right now. The introduction of Uniswap that allows converting any Ethereum-based tokens between each other boosted its usage further.
  • EOS – EOS was created by an American programmer Daniel Larrimer as an alternative to Ethereum with scalability and high throughput set as the basic goals of the project. Based on the Delegated Proof of Stake (DPoS) consensus algorithm, EOS features zero fees which is a great benefit for end-users.
  • TRON – Created by Justin Sun, TRON is also based on DPoS and focuses on the entertainment industry. In 2018, the project acquired BitTorrent and provided some monetization options to the users of this most popular file-sharing technology.
  • Flow – Flow is another decentralized platform created by the team behind the famous game CryptoKitties with the key goal to serve applications, games, and especially collectible tokens. Initially launched on Ethereum, the project plans to develop its own blockchain to avoid the scalability problem.

Table with best dApps in 3 mentioned platforms

The ranking of these most popular dApps is based on the number of daily users as of February 2021.

Ethereum EOS TRON FLOW
Uniswap: a decentralized protocol for providing liquidity on Ethereum Upland: an online game for trading property on EOS blockchain Justswap: a decentralized token exchange NBA TopSHot: a marketplace for trading digital collectibles
1inch.exchange: a decentralized exchange for swapping cryptocurrencies between wallets Yup: a market where you can  get paid for sharing your opinion Tron Stake: an application for passive income via staking TRX CryptoKitties: an online game where users can create and trade unique pets
Synthetix: a DeFi applicaiton for trading derivatives  Chain Clash: another collectible and battle game on EOS TronCase: another TRX staking application UFC: a marketplace for trading digital assets in the sports industry

FAQ section

What is the possible future of decentralized apps?

Although dApps carry great potential, they are still far from getting adopted at scale. Many experts predict that they will fully replace centralized applications in time, but most likely, they will be used on a par with the latest.

What issues prevent the popularity of dApps?

Their usability is worse than in centralized alternatives. Also, the bugs in the code have a negative effect on the security of funds.

What other popular platforms provide environments for dApps’ creation?

DappRadar’s ranking features the following top platforms in addition to those mentioned above: IOST, ThunderCore, ONT, VeChain, WAVES, NEO, WAX, and Steem.

In which verticals have dApps become most popular?

DeFi, gambling, games, exchanges, and NFT (non-fungible tokens) marketplaces.