Nowadays, decentralized applications (DApp) are gradually becoming a prominent trend, attracting the attention of developers and users in the crypto field. Unlike traditional applications, DApp operates on the blockchain platform, eliminating dependence on central servers and providing a more distributed, transparent and secure system. So what is DApp? Let's find out with Coin Review!

What is DApp?

DApp (Decentralized Application) are decentralized applications, developed on a decentralized network that supports Smart Contract and provides a Frontend interface for users to interact. These applications often focus on solving specific problems in each field.

Since DApps are built directly on Blockchain platforms, their features and performance will depend on the characteristics of that blockchain, such as transaction speed, transactions per second (TPS), scalability, and stability.

The first decentralized application was launched on the Ethereum platform on April 22, 2016.

What are the characteristics of DApp?

One of the defining characteristics of DApps is their decentralization, meaning that no single entity has complete control over user activity on these projects. This allows users to participate freely without being controlled by any single organization. Additionally, many decentralized applications in the crypto space are often open-source, allowing the community to develop and build new projects based on the source code of existing DApps.

In order to develop a DApp, the blockchain platform must support Smart Contracts. This dispels the misconception that any blockchain can build an ecosystem with hundreds of applications. Only blockchains that support Smart Contracts are capable of forming a platform for decentralized applications.

For example, before 2021, Terra was just a payment-focused blockchain. However, after supporting Smart Contracts in late 2020, the Terra ecosystem has grown significantly in 2021.

Another characteristic of DApps is that the development process often has a relatively similar structure, including the ideation stage, publishing the Whitepaper, creating and distributing tokens...

How does DApp work?

To better understand what DApp is, let's learn how it works with Coin Review!

DApps stand out with their unique features and wide applicability, especially in the field of decentralized finance (DeFi). The basic operation process of DApps is as follows:

• Running on Backend: DApps primarily operate on the backend through Smart Contracts, which are contracts that automatically execute when pre-programmed terms are met. These Smart Contracts run on the blockchain and serve as the foundation of the DApp.

• Smart Contract Requirements: When the conditions in the Smart Contract are met, the transaction will be automatically executed. All information related to the transaction will be recorded, stored and distributed permanently on the blockchain – a public ledger.

• Public and secure ledger: The public ledger on the blockchain is encrypted and highly secure, making it almost impossible for DApps to be destroyed or modified without authorization. This ensures the transparency and security of transactions.

• Transaction Status: If the Smart Contract conditions are not met, the transaction will be canceled and returned to its original state.

This process reflects the automation, transparency and security of DApp. With the rapid development of blockchain technology, the processes and applications of DApp are becoming more and more diverse and rich.

DApp Classification

Based on the purpose of use, DApps can be divided into many types such as:

• Exchanges: Decentralized applications that allow users to exchange digital assets, such as Uniswap or PancakeSwap.

• Gaming: DApps in the gaming space often incorporate blockchain elements, like Axie Infinity.

• Finance: Includes DeFi (decentralized finance) applications that provide borrowing, lending, or asset management services such as Aave, Compound.

• Gambling: Some DApps are developed for online gambling purposes, where outcomes are determined through smart contracts.

Additionally, when classified by blockchain, DApps are divided into 4 main types:

• Type I: DApps that operate on their own blockchain. For example, Bitcoin and Ethereum, both of which are independent and self-operating blockchains.

• Type II: Protocols that operate on top of Type I blockchains, and often have their own tokens to perform their functions. For example, protocols like Uniswap (which operates on Ethereum) and uses the UNI token.

• Type III: Protocols that operate using Type II protocols. Similar to Type II, these DApps also have their own tokens to power their operations. For example, a financial application that operates on the Uniswap platform uses the Uniswap protocol to provide token swapping services.

Thus, depending on the purpose of use or blockchain system, DApps can be classified to help users easily understand and use the right application.

The most prominent DApps today

Some typical DApps today are:

The most prominent DApps today

• Minds: This is an open and decentralized social network that encourages user interaction and freedom of expression. Using blockchain technology, Minds ensures security and transparency, while giving users complete control over their personal data.

• Peepeth: A decentralized social network that encourages sharing meaningful and positive content. Peepeth allows users to send “peeps” (short messages) on the Ethereum blockchain, ensuring transparency and data security and is becoming a notable competitor to Twitter.

• Uniswap: This is a decentralized cryptocurrency exchange (DEX), which helps users exchange digital assets without the intervention of traditional exchanges.

• Augur: This app allows users to participate in market predictions and bet on global events, leveraging the transparency and decentralization of blockchain.

• Axie Infinity: Combining NFTs and Ethereum cryptocurrency, Axie Infinity is a unique online game that breaks new ground in the gaming industry by allowing players to monetize their gameplay.

• Decentraland: This is a 3D virtual world built on the blockchain where users can interact, build, and even earn money from their activities in this virtual world.

• CryptoKitties: This DApp brings a new way to interact with blockchain through buying, selling, and trading unique digital cats, demonstrating the potential of NFTs in the blockchain ecosystem.

• MakerDAO: A decentralized financial system that allows users to borrow and lend cryptocurrency using Dai, a blockchain-based stablecoin.

Applications of DApp on blockchain

DApps are designed to solve specific problems in many different fields. For example:

• Payment issues: Apps like Kado on Terra help users make payments quickly and transparently.

• Trading problem: Decentralized exchanges (DEX) like Uniswap, PancakeSwap provide a solution to exchange digital assets without going through intermediary organizations.

• Real-world data problem: Projects like Oracle solve the problem of bringing real-world data onto the blockchain, serving smart contracts in the crypto ecosystem.

Additionally, some DApps address more abstract areas like blockchain infrastructure, making building and maintaining decentralized platforms more efficient.

In terms of practical applications, DApps are not only limited to the financial sector but also extend to healthcare and charity. For example, Angel Protocol on Terra supports charitable activities, helping to donate transparently and efficiently through blockchain.

What are the advantages and disadvantages of DApps?

1. Advantages

DApps not only change the way we interact and transact, but also bring many significant benefits. Some of the main advantages of DApps are:

• Privacy: Users can interact with DApps without revealing their personal identities, protecting privacy and ensuring anonymity.

• Censorship Resistance: DApps are governed by the user community, independent of any authority or organization, reducing the risk of censorship or external interference.

• Data integrity: Data on the blockchain is protected by cryptographic principles, ensuring that they cannot be altered or hacked during transmission and storage.

• Open Source: Most DApps are open source, allowing the community to freely develop and improve the application, promoting innovation, security, and transparency.

• Independent Operation: Once deployed, DApps can operate without depending on any third parties, which reduces risk and improves performance.

2. Disadvantages

Despite the many benefits and potential, DApps also face a number of limitations and challenges, especially when running on Ethereum or other blockchains:

• Transaction fees and slow processing times: DApps on Ethereum often suffer from high transaction fees (gas) and slow processing times, especially when the network is congested, which is frustrating for users.

• Lack of Transparency in Practice: Although DApps are advertised as transparent, the majority of user activity occurs off-chain. This means that not all DApps can guarantee the expected complete transparency.

• Immutability of Smart Contracts: Once Smart Contracts are deployed, they cannot be modified or updated. This creates challenges when operations need to be adjusted or changed over time.

• High cost of using blockchain: Deploying complex operations on blockchain can increase gas costs. If the entire system relies on Smart Contracts, the cost of execution can be too high, making the operation difficult or impossible.

The Potential of DApps in the Future

The potential for DApp development in the future is huge, and can be predicted through the following trends:

• Expanding into more areas: DApps are not limited to decentralized finance (DeFi) but can also be applied to areas such as healthcare, education, logistics, and entertainment. Applying blockchain in these industries can open up new opportunities and help solve many complex problems in society.

• Enhance decentralization and transparency: DApps will continue to promote decentralization and transparency, helping users trust the system, reduce dependence on intermediaries, and increase data security.

• Improved performance and reduced costs: The continuous development of blockchain with new technologies and technical improvements will help DApps improve performance, while reducing deployment and usage costs, making their application more feasible and popular.

• Supply Chain and IoT Development: DApps have the potential to play an important role in supply chain management and tracking, while also supporting the connection and control of IoT devices, improving efficiency and transparency in supply chain management.

• Potential of DeFi 2.0: DApps can lead the wave of DeFi 2.0 development, in which decentralized applications will provide more complex and advanced financial solutions, expand capabilities and user experiences, and bring new services to developers.

Conclude

Through the article What is DApp, it can be seen that with outstanding features such as decentralization, high security, and the ability to operate without intermediaries, DApp is gradually becoming the platform for modern applications and services. Although there are still some limitations such as high costs or performance, in general, the development potential of DApp is huge. In the future, the advancement of blockchain technology will help DApp develop outstandingly, creating changes in the way we interact, transact and use digital services.