What Are Decentralized Applications (DApps)?
- August 1, 2022
- Binance Academy
- Kuro Satoshi
Open-source: The source code of DApps is available to the public, meaning that anyone can verify, use, copy, and modify them. There is no single entity controlling the majority of its coins or tokens. Users can propose and vote on changes to the DApp too.
Decentralized and cryptographically secure: To ensure data safety, all information of the DApp is cryptographically secured and stored on a public, decentralized blockchain, maintained by multiple users (or nodes).
A tokenized system: DApps can be accessed with a cryptographic token. They can adopt cryptocurrencies like ETH, or generate a native token using a consensus algorithm, such as Proof of Work (PoW) or Proof of Stake (PoS). The token can also be used to reward contributors like miners and stakers.
Under this broad definition, the Bitcoin blockchain can be defined as a DApp — and arguably the first DApp ever. It’s open-source, with all data live on its decentralized blockchain, relies on a crypto token, and uses the PoW consensus algorithm. The same applies to other blockchains that have the above features.
However, today the term “DApps” generally refers to all applications that have smart contract functionalities and run on blockchain networks. The Bitcoin blockchain does not support smart contracts, so most people wouldn’t consider it a DApp.
How do DApps work?
Once a smart contract is deployed on the blockchain, it is hard to change the code or destroy it. Therefore, even if the team behind the DApp has disbanded, users can still access the DApp.
Benefits of DApps
While the interfaces of DApps and traditional applications can look similar, DApps offer multiple benefits compared to their centralized counterparts. Web apps store data on centralized servers. A single compromised server may take down the entire network of the app, making it temporarily or permanently unusable. Centralized systems may also suffer from data leakages or theft, putting the companies and individual users at risk.
DApps, in contrast, are built on distributed networks with no central authority. With no single point of failure, DApps are less vulnerable to attacks, making it very difficult for malicious actors to hijack the network. The P2P network can also ensure the DApp continues to work with minimal downtime, even if individual computers or parts of the network malfunction.
Another benefit of DApps is that developers can easily integrate cryptocurrencies into their basic functionalities by leveraging smart contracts. For example, DApps on Ethereum can adopt ETH as payment without integrating third-party payment providers.
Limitations of DApps
DApps hold the potential to become an important part of a censorship-free future, but every coin has two sides. Decentralized applications are still in the early stages of development, and the industry is yet to resolve limitations such as scalability, code modifications, and a low user base.
Making modifications to a DApp is also challenging. To enhance user experience and security, a DApp will likely need ongoing changes to fix bugs, update the user interface, and add new functionalities. However, once a DApp is deployed on the blockchain, it is hard to modify its backend code. It would require a majority consensus from the network’s nodes to approve any changes or improvements, which could take a long time to implement.
Popular DApp use cases
DeFi and DEXs
Borrowing and lending are the most popular types of financial services that decentralized applications provide. DeFi DApps offer instant transaction settlement, minimal-to-none credit checks, and the ability to use digital assets as collateral. Users can have more flexibility on DApp lending marketplaces. For example, lenders have more control over their loans by choosing which token to lend and on what platform. Users can also potentially earn 100% of the interest generated from the loan since they don’t have to pay any intermediary fees.
DApps are also tackling issues that social media platform users face. Centralized social media giants like Twitter and Facebook are often criticized for censoring posts and mishandling user data. With decentralized social DApps like Steemit, the community can interact freely and express their opinions with fewer restrictions and censorship while enjoying greater control of their personal information.
How to connect to DApps?
Depositing BNB to Trust Wallet
Tap [Receive] to view your BNB deposit address. You can then copy and paste this address into your withdrawing wallet or scan the QR code to make the transfer.
After the transaction is confirmed on the blockchain, you will see the BNB amount on your Trust Wallet homepage.
Adding CAKE to your Trust Wallet list
Trust Wallet’s default list of tokens does not include DApp tokens like PancakeSwap (CAKE). To make CAKE visible in your wallet, you need to add it to the list first.
Tap [Add Tokens] and search “PancakeSwap”. You will see CAKE on different blockchains. As we’re using BSC, tap to toggle on the button next to [BEP-20 CAKE].
You should now see CAKE on your Trust Wallet token list.
The next step is connecting your Trust Wallet to PancakeSwap. You can connect through the built-in mobile browser on Trust Wallet or a desktop.
Connecting to PancakeSwap via the Trust Wallet browser
2. You’ll be prompted to connect your Trust Wallet. Tap [Connect].
Connecting to PancakeSwap via a desktop browser
2. Click on the [Trust Wallet] icon and you’ll see a QR code on the screen.
3. Open your Trust Wallet app and go to [Settings] – [WalletConnect].
4. Tap [New Connection] and scan the QR code.
5. You’ll be prompted on the app to allow the connection. Tap [Connect].
DApps are expanding the functionality of the Web by enhancing conventional applications with blockchain technology. Decentralized applications could bring even more innovative use cases to the market in the future. As DappRadar reported, DApps recorded almost 2.4 million daily active users by Q1 2022, and user interest is expected to grow continuously. However, DApp developers and the blockchain networks they build on are yet to address the current limitations before reaching mass adoption.