First and foremost, just what are dapps? The answer is decentralized applications. Dapps are a new type of software application. Although the concept isn’t new, dapp adoption in crypt-related projects is on the rise—with over 4,000 in existence so far, including PancakeSwap and OpenSea.
Decentralized apps act like traditional applications, but provide a more secure network and aren’t controlled by a central authority. Due to their open-source software, they can’t be shut down. Dapps and smart contracts work hand in hand to run transactions on either a P2P network or blockchain.
In this article, you’ll discover dapp origins and the technical layers behind the solution, while learning how to start interacting with decentralized applications.
With a broad vision of decentralized life, Vitalik Buterin proposed Ethereum back in 2013. This goal involved a blockchain-based internet, which put control back into users’ hands, as opposed to corporations. From this, smart contracts emerged—digital automated statements that are immutable.
Early examples of web-based solutions performing similarly to modern dapps included Tor, LimeWire, Napster, although, at the time, they didn’t fall under an overall umbrella term. In fact, it wasn’t until The General Theory of Decentralized Applications report was released in 2014, that decentralized applications were defined.
The report included the following key attributes of decentralized applications:
Open-source. A decentralized application must operate autonomously, and with no single body controlling the majority of its tokens. All changes must go through a consensus process with its users.
Decentralized blockchain. All information and data must be stored on a publicly accessible blockchain network.
Cryptographic token. Decentralized applications must have a cryptographic token for access and be used for contributor rewards.
Consensus. There must be a consensus method to generate tokens, such as proof-of-stake or proof-of-work.
Although a decentralized application needs all these attributes, there are several variations (commonly known as layers) you may come across.
There are three different layers to decentralized applications. Each is dependent on how users interact with them. So, how do you differentiate between the different layers?
Layer 1 dapps exist on their own blockchain, and require a consensus algorithm. The most popular project of this kind is Bitcoin.
Layer 2 dapps exist on top of layer 1. They’re considered as protocols and utilize tokens for interactions. Omni Protocol is an example of a layer 2 dapp.
Layer 3 dapps are built on top of layer 2 and hold the data required for other layers to interact. Layer 3 stores the app’s programming interface, as well as the scripts for layers 1 and 2 to operate. SAFE Network is an example of a layer 3 decentralized application.
Benefits of decentralized applications include:
Safeguarded user privacy. Users don’t need to submit any personal information to use dapps.
No censorship. A dapp could be developed as an alternative to current social media platforms. Should this occur, it would be resistant to censorship, with posts unable to be removed due to the blockchain record.
Development flexibility. Dapps built on Ethereum are presented with more flexibility and provided with the infrastructure needed for innovation.
Potential dapp drawbacks may include:
Scaling issues. Dapps are still in early development, and scalability issues can include network congestion.
Challenging user interface. In comparison to centralized applications, dapps are typically not as user-friendly—though developers are actively working to improve the user experience.
Difficult coding modifications. Data and code published on the blockchain can be difficult to update when dapps need enhancements or bug fixes.
You can access and interact with dapps on most web browsers. A well-built decentralized application should function as smoothly as a centralized application.
Depending on the dapp you’re wanting to use and the blockchain it’s built on, however, you may need to go further. For example, for those wanting to use Ethereum-based dapps, you’ll also need an Ethereum wallet that can interact with smart contracts.
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