When you think of apps, Airbnb, Uber and YouTube may come to mind. These are all centralised in that they are controlled by a single entity, require a user’s personal information or involve intermediaries in some way.
A decentralised application (or Dapp) connects users and providers in a direct way and eliminates the need for intermediaries. Peer-to-peer computing networks replace the centralised server client of a traditional app. The idea behind Dapps is that once they are deployed, they cannot be shutdown, no maintenance or governance is needed and they will operate autonomously.
Four characteristics of Dapps are listed below:
- Open source so users can trust the Dapp and how it uses data,
- Has an internal currency to monetise the Dapp and so that the developers can get paid,
- A decentralised consensus mechanism, and
- No central point of failure.
Dapps often provide their own tokens built on top of a blockchain. For instance, if a raw digital resource is being offered by a Dapp, then the native token is a crypto-commodity. If the Dapp provides a consumer-facing finished good or service, then the native token is known as a cryptotoken.
Examples of Dapps
The first decentralised application was BitTorrent, which enables users to share and download files in a peer-to-peer manner. Instead of downloading files from a central server, each user joins a swarm of hosts that continually uploads and downloads files with each other. The BitTorrent protocol is virtually impossible to take down given its peer-to-peer nature.
Dapps built on blockchain technology come to the forefront with the release of the CryptoKitties game on Ethereum. Ethereum is the leading Dapp platform at the moment, but faces a lot of competition from other smart contract blockchains. Dapps mainly focus on gaming, gambling and decentralised exchanges but none have gained critical mass yet. Gaming is a fruitful area for Dapps, as they would open up the ownership of in-game assets so that users could trade them and inherit these items in new games.
However, CryptoKitties also illustrated that Dapps still have features that are centralised. While the token representing a particular CryptoKitty was decentralised, all other elements were centralised such as the marketplace, the auctions and the image of the collectable cats, since they are all owned by the company Axiom Zen.
You can check the ranking and metrics of Dapps at DappRadar which shows that eight of the top ten Dapps by volume are based on Ethereum, such as Uniswap, Curve, and Balancer. Other popular Dapps are decentralised exchanges based on EOS (Newdex) and TRON (JustSwap). In terms of the number of users, Uniswap is the most popular Dapp. Most of the top ten Dapps by the number of users are based on TRON (e.g., Sun, JustSwap, and JUST).