Skip to Content

What is Web3 DApp?

By: Author Olin Wade (Remodel or Move Stuff)

A Web3 DApp (decentralized application) is an application built on blockchain technology that operates without centralized control. DApps aim to leverage the key benefits of blockchain such as transparency, security, decentralization, and immutability. In this article, we will dive into what exactly Web3 DApps are, their key characteristics, benefits, and examples of popular DApps across industries.

What is a DApp?

A decentralized application (DApp) has backend code that runs on a decentralized peer-to-peer network rather than a single centralized server. DApps connect users and providers directly without needing a central intermediary. This avoids a single point of failure and creates resilience. DApps are open-source, transparent, and autonomous. No single entity controls a DApp after it has been deployed – they are maintained by users and developers.

Key characteristics of a DApp include:

  • Open source code that runs autonomously via smart contracts
  • Data and records stored on a blockchain
  • Use cryptographic tokens
  • Can have frontend user interfaces and client-side logic

DApps essentially replace traditional client-server models and central databases with decentralized networks and blockchains. This eliminates centralized points of control while providing security, speed, transparency, and accuracy.

How is a DApp different from a normal App?

Here are some key differences between a traditional centralized application and a DApp:

Centralized Application DApp
Operates on centralized servers and databases Operates on decentralized P2P networks
Code is closed source Code is open source
Data controlled by app owners Data stored on public blockchain
Prone to data hacks and leaks Highly secure due to cryptography
Subject to downtime Resilient with no downtime
Central point of failure No single point of failure

In summary, DApps offer decentralization, end-to-end encryption, trustless exchange, and transparency. However, normal apps can be easier to update since they don’t require consensus of all nodes.

How do DApps work?

DApps function via smart contracts that autonomously run code and logic on a blockchain. Here is how DApps work:

  1. The DApp frontend connects users to the blockchain
  2. Users generate and broadcast transactions via the frontend
  3. Transactions are packaged into blocks and validated by a decentralized network of nodes
  4. Validated blocks are cryptographically chained onto the blockchain
  5. The network executes relevant smart contracts in the DApp
  6. State of DApp data is updated via the blockchain

The key steps are connecting the frontend interface, sending transactions to execute smart contracts, and updating DApp state via the blockchain. The decentralized blockchain network replaces centralized servers and databases. DApps will often use consensus mechanisms like proof-of-work or proof-of-stake for validation.

DApp Architecture

Most DApps have a backend that runs on blockchain nodes and a frontend user interface. Here is the typical architecture:

  • User interface – Provides frontend app interface for users
  • Application logic – Connects UI to blockchain and contains business logic
  • Smart contracts – Program logic that runs on the blockchain
  • Peer-to-peer network – Validates transactions and smart contracts
  • Consensus mechanism – Enables nodes to agree on network state
  • Cryptographic tokens – Native assets that fuel the protocol
  • Data storage – Distributed ledger that stores DApp state and data

Different components like wallets, databases, cloud servers, APIs, identity management, payments, and more can also be integrated. But the blockchain network and smart contracts are the core backend components of a DApp.

Benefits of DApps

Here are some of the key benefits that decentralized apps provide over traditional apps:

  • Autonomy – DApps operate via smart contracts in a decentralized and trustless manner without any central control after they are deployed.
  • Reliability – There is no single point of failure since DApps run on thousands of nodes across global networks.
  • Transparency – Changes to DApp code or data are immediately viewable to all network participants.
  • Security – Cryptography, consensus, and immutability make DApps far more resistant to tampering.
  • Privacy – Users have greater control over data shared on a blockchain-based DApp.
  • Resilience – Hacker attacks or system crashes on parts of a decentralized network don’t affect overall uptime.
  • Ecosystem – Open ecosystems with tokens incentivize collective contribution and growth.

DApps essentially leverage the core advantages of blockchain technology – security, accuracy, transparency, decentralization, resiliency, and ease of use. This makes them appealing for many kinds of applications.

Examples of DApps

DApps are being built across industries to provide decentralized solutions to users. Here are some examples:

Finance

  • Uniswap – Decentralized trading and automated liquidity protocol
  • Compound – Allows lending and borrowing crypto assets
  • Aave – Open-source liquidity protocol for lending and borrowing assets
  • MakerDAO – Stablecoin and decentralized reserve system

Social Media

  • Steemit – Blockchain-based blogging and social media platform
  • Sapien – Democratized social platform with tokenized rewards
  • Indorse – Professional network where users control data

Gaming

  • Gods Unchained – Blockchain-based collectible card game
  • Decentraland – Virtual reality world owned by users
  • CryptoKitties – Collectible game of breeding digital cats

Identity

  • Civic – Secure digital identity platform powered by blockchain
  • uPort – Self-sovereign identity system for Ethereum
  • ShoCard – Protects consumer privacy using blockchain identity

Supply Chain

  • Provenance – Improves transparency in supply chains
  • ShipChain – End-to-end logistics tracking via blockchain
  • Chronicled – Digitizes physical goods and supply chains

These are just a few examples showcasing the diversity of DApps across finance, social media, gaming, identity, supply chain, and more. The opportunities for blockchain-based applications are vast.

Limitations of DApps

While DApps provide many benefits, they also come with certain limitations:

  • Often have poor user experiences compared to responsive web or mobile apps
  • Can have slow transaction speeds depending on underlying blockchain
  • Security issues around private keys and wallet hacks
  • Adoption challenges getting mainstream users on board
  • Uncertainty around regulations for DApps and crypto
  • Relatively small number of active DApp users and developers

Many limitations relate to blockchain scalability issues and the nascency of the technology. As blockchain platforms evolve and mainstream adoption grows, the limitations may be overcome.

DApp Platforms

Several blockchain platforms have been specifically designed for building and deploying decentralized applications:

Ethereum

The most popular blockchain for DApps given its native support for smart contracts. 70-90% of DApps are built on Ethereum. Key advantages include a large community of developers and users, the Solidity programming language, and the ability to create custom tokens.

EOS

Provides an operating system-like platform for DApps with services for authentication, cloud storage, and running large applications. Focuses on speed, scalability, and eliminating transaction fees.

TRON

TRON offers high throughput for decentralized applications via its own blockchain and protocol. TRON’s network aims to provide unlimited scalability for DApps.

Cardano

An open-source blockchain known for its research-driven approach and focus on security and scalability. Developers can build DApps on Cardano using various programming languages.

Tezos

Tezos utilizes a liquid proof-of-stake consensus algorithm that enables automatic, decentralized upgrades via stakeholder voting. This allows DApps to evolve seamlessly without hard forks.

Developers should evaluate each platform’s capabilities like transaction speed, scalability, language support, consensus mechanism, governance model, and overall maturity when selecting a blockchain for DApp projects.

Building a DApp

Here is an overview of key steps for building a decentralized application:

  1. Select a blockchain platform like Ethereum that supports DApps
  2. Define the use case, target users, and value proposition
  3. Design the user experience flow and application architecture
  4. Write smart contract code in a language like Solidity
  5. Develop and connect the frontend user interface
  6. Test smart contracts extensively for vulnerabilities
  7. Deploy smart contracts and launch DApp
  8. Incentivize user adoption such as via airdrops or token rewards
  9. Iterate and improve DApp based on analytics and user feedback

Like any application, planning the user experience first is key. Extensive testing is critical given the immutable nature of smart contracts. Driving user adoption via marketing and incentives is also a major challenge for new DApps.

The Future of DApps

Despite current challenges, DApps hold significant potential to fundamentally rearchitect many kinds of decentralized services and applications. Wider adoption will depend on overcoming blockchain limitations and providing easier DApp onboarding for mainstream users. User experience design will be a key driver for making DApps an integral part of Web3.

Here are several developments that could shape the future evolution of decentralized applications:

  • Scalability via layer 2 solutions such as Plasma, Truebit, Raiden, etc.
  • Interoperability between different blockchains
  • Rise of blockchain platforms purpose-built for DApps like EOS and Cardano
  • Killer DApps that drive mass adoption in industries like finance, social, identity, gaming, etc.
  • Expansion of blockchain oracles for real-world data
  • Advancements in cryptography, privacy, and zero-knowledge proofs
  • Emergence of new consensus models beyond just proof-of-work
  • User experience improvements through new standards and frameworks
  • Growth of cloud services and solution accelerators for blockchain SaaS

As blockchain capabilities continue to advance, we will see entirely new kinds of DApps that are performant, scalable, interoperable, and easy to use. DApps have the potential to truly decentralize services and reshape the internet and Web3 in profound ways.

Conclusion

Decentralized applications aim to harness the key attributes of blockchain technology – transparency, security, immutability, resilience, and decentralization. They eliminate central points of control and connect users directly via peer-to-peer networks and open-source blockchain protocols.

DApps provide a number of benefits over traditional applications but still face adoption challenges around scalability and user experience. However, steady advances in blockchain platforms and layer 2 solutions are helping overcome these issues. And innovative DApps in fields like DeFi and gaming are demonstrating the immense possibilities.

With continued evolution, DApps may fundamentally rearchitect services across finance, technology, media, government, healthcare, and more. The programmable infrastructure of blockchain offers the flexibility to transform processes within and across enterprises. Just as mobile apps spawned new business models, DApps have the potential to drive the growth of Web3 with open, decentralized software.