We use apps every day on mobile, desktop, smart TVs, and IoT devices. In the last decade, apps have evolved to provide user experiences and utility that realize the Web’s full potential, e-commerce, high-speed internet, and 5G cellular data connections.
But there are fundamental problems many see with the centralized app ecosystem.
It’s built on third-party transactions and a centralized model that benefits the ecosystem owners—large global corporations.
They control the terms of service.
The apps extract transaction fees, subscriptions, and personal data from users who wish to do business, consume content or maintain personal relationships. They grow the wealth of the ecosystem owners, often at the expense of the creators and participants.
And hackers continue to expose security vulnerabilities in centralized apps.
What’s the solution?
dApps—decentralized apps that run primarily on the Ethereum blockchain—aim to change that model. Or at least offer secure and autonomous alternatives.
This is a complex topic. For today, let’s focus on the key difference between dApps and the apps you use on mobile, desktop, and other devices.
Participants in the dApp ecosystem determine the terms of service that govern their usage.
dApp concepts and terminology
Let’s get started with core concepts that will help you understand the dApp ecosystem and how developers and communities are using dApps to change the game of global business.
Smart contracts – Computer code on a blockchain that establishes the rules for using a service. Smart contracts can govern creator ownership, who can use the service, and voting, with no middleman required.
Consensus protocol – Ethereum 2.0 proof-of-stake and other technologies that enable ecosystem participants to determine the validity of a smart contract transaction.
DAO/DAC – Decentralized Autonomous Orgs / Corporations are self-governed user communities that pool resources and decide how they are allocated to participants.
DEX – Decentralized Exchanges, conceptually similar to a stock market trading platform, that enable and facilitate secure peer-to-peer DeFi user transactions of crypto and NFTs.
Oracle network – A service that delivers off-chain data to smart contracts or implements bridges between multiple blockchains and centralized systems. A decentralized blockchain oracle is considered more reliable since it obtains data from various sources instead of a central database.
dApp considerations and limitations
There are legitimate reasons why the centralized application model has become so popular. The industry has had nearly three decades to continually improve app user experiences, making them convenient, feature-rich, and thus “sticky” with those who benefit from them.
For dApps to reach the same level of popularity, decentralized platforms and developers must provide great user experiences and solve these key considerations and limitations.
dApp maintenance – Ethereum.org admits that the ERC-20 smart contract implementation in Ethereum 2.0 can make it challenging to maintain dApps and fix bugs.
Digital divide – dApp development and user communities require sophisticated conceptual and technical knowledge that currently rests in the hands of a small minority.
Energy consumption – Early adopter platforms can use intensive amounts of energy. They risk becoming unpopular and expensive in an era of climate change and green energy emphasis.
Security – Due to the dAPP maintenance consideration, smart contract security vulnerabilities can be introduced that persist on the blockchain and are not easy to fix.
Transaction speed – Early adopter platforms do not provide the throughput necessary to process millions of transactions a second.
The projects that solve these problems are more likely to succeed in the long-term blockchain technology adoption cycle.
Leading dApp projects
Here are six projects to introduce you to the big ideas and unique value propositions dApps offer.
ALGO – Algorand enables the future of finance through a convergence between decentralized and traditional financial models, focusing on providing green smart contracts.
CAKE – PancakeSwap is the most popular decentralized platform, offering a DEX built on the Binance Smart Chain that enables users to trade, earn, and win crypto.
FTM – The Fantom ecosystem boasts over 80 dApps already deployed. Fantom’s aBFT consensus protocol–asynchronous Byzantine Fault Tolerance, the highest level of security a consensus algorithm can provide—implements reliable high-speed transactions with low fees.
LINK – Chainlink is an oracle network used by Blockster and many others to securely connect smart contracts with off-chain data and services. Chainlink supports advanced smart contracts on any blockchain.
NEAR – Welcome to the Creator Economy. NEAR’s climate-neutral blockchain eliminates barriers to Web 3.0 adoption by empowering creators and the DAO communities that support them with DeFi tools and platforms to transact NFTs.
WAVES – A global open-source platform and stack of technologies for building secure decentralized applications based on proof-of-stake consensus. Waves aspires to make the most of the blockchain with a minimal carbon footprint.
If you want to geek out, learn more about dApp technology and the ERC-20 protocol standard at ethereum.org.
Search the tokens above on CoinGecko to find project website links and more. And don’t forget to search Blockster for other articles about these and other dApp leaders!