What is dApps in Crypto? Working, Goals, Examples

dApps are short for Decentralized Applications that run on the blockchain network. In general, traditional apps like Facebook, X, and Instagram are known as centralized apps because they are owned and controlled by the respective companies. dApps are gaining popularity for their decentralized nature. These are built on top of blockchain networks like Ethereum, Solana, or Polygon. Most of them are built on Ethereum and are spread across streaming services, exchanges, games, and NFT marketplaces. dApps are still under development, and we have yet to witness the birth of many more.

What are dApps in Crypto?

Decentralized applications that run on a network of computers rather than a single computer controlling the whole backend are known as dApps. To understand dApps, one must compare them with their opposite – Centralized Apps. All those popular apps out there that have millions of users worldwide, like YouTube, Facebook, Instagram, WhatsApp, Google, X, and many others, are Centralized applications. These are built by large organisations having complete control over the back end and data.

Decentralized applications or dApps don’t have a centralized body, and users can view and suggest changes to the code that runs them. These are open-sourced and run on a P2P network rather than a single server. This means that there isn’t one single entity that controls the data; instead, it’s stored and maintained in a network of computers of those who are part of it. This distributed network is known as nodes, and these are used to store and verify transactions to maintain a shared public ledger. This is done with the help of self-executing codes that run when certain criteria are met. No Intermediaries have complete access to your data. You can learn more about blockchain technology and decentralized networks from the SEC.

How do dApps Work?

Centralized apps run on servers owned by large organisations that created those apps, which gives them complete control over the data transactions that occur on their applications. Decentralized applications do not have a single server where they run; instead, they operate on a blockchain, which is a network of computers distributed all over the world. This network of computers is called a node, and they store a copy of the ledger, which contains all the transactions. This feature is what makes the blockchain more secure than traditional servers. 

dApps have a regular front end like the rest, but the back end is composed of this blockchain that is hard to manipulate. Smart contracts, which are known as the brain of the dApps, are self-executing codes that make it free from having a middleman, employees, or centralized entity to control. Users can install and run nodes on their own computers and be a part of the system. Each transaction happening on the dApps is validated and stored on nodes, and one usually has to pay some gas fee to the network for processing it. This is divided among the nodes, rewarding you for being a part of it. You can read more about smart contracts and decentralized applications from the CFTC.

Tokens are created for dApps for rewarding users, and these are stored in wallets. There are several wallets out there, like MetaMask, Phantom, or Trust Wallet. Tokens are also traded on markets or other Tokens or fiat currency. Wallets are like your regular login; the blockchain interacts with the wallet for transactions, and it’s your identity on the network, which contains your tokens. These are the ones that run the dApps: wallet, smart contracts, and the blockchain.

Examples of dApps

dApps are spread across several categories, like DeFi (Decentralized Finance), which are used like an exchange, bank, or trading platform, NFT marketplaces, DAOs (Decentralized Organizations), which act like a decentralized governing body for blockchain, and others like social apps and games. There are thousands of dApps out there serving various needs. Let’s look into a few of them.

1. Audius   

Audius is a decentralized music streaming app built on Solana and Ethereum networks. It aims to bring music control to the general public while rewarding creators and artists without the need for intermediaries. It is a free-to-use platform, but artists can choose to set a price on their work, or listeners can tip their favorite artists. All of the tips and revenue go directly to the artist without any fees or middlemen.

2. Lens Protocol

Lens Protocol is created by the team from Aave, and it’s a decentralized social networking protocol built on Polygon, offering complete control to users. Its modular design lets developers build apps on top of Lens, and there are clones like Lenster and Lenstube that replicate Twitter and YouTube but without any censorship. Content can be monetized, and you can truly own your profile and content.

3. Uniswap

Uniswap is the largest decentralized exchange (DEX) built on Ethereum for swapping tokens without any middlemen. It has now expanded to many other networks, including Polygon, Arbitrum, and BNB Chain. Uniswap runs entirely on smart contracts and allows users to swap or transact tokens directly from their wallets without any centralized exchanges or brokers that charge them.

Conclusion

dApps are the new version of applications that give control to the general public; they bring all the benefits of the blockchain network into applications. These run on nodes or networks of computers, unlike those that run on single computers or servers. The blockchain provides unmatched security to the network. Without any middlemen or large entities controlling the backend and associated data, users get transparency and control over their data like never before. These apps are still gaining popularity and traction with more people realising their benefits. dApps reward their users, and like always, it’s best to enter early to reap the rewards.

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