Let’s walk before we run. What are centralized applications?

• Let’s take a step back and look at the definition of an “application”: a software program designed for end-users. And the word “centralized” can be defined as “the concentration of power in a single authority or owner.” Given these 2 definitions, we can infer that “centralized applications” are programs designed for end-users that have a concentrated single authority or owner.
• In practical terms, with a centralized application, the application software resides on one or more servers controlled by the owner. As a user, you’ll interact with the app by downloading a copy of the app and then sending and receiving data back and forth from the company’s server.
• Social media platforms like X, Facebook, Instagram or financial institutions like banks use centralized apps to give their customers online access to their accounts.

That was easy, so then what are dApps?

• Using the same approach, we can infer that “decentralized” describes organizations that are not controlled or owned from a single central location, but rather from many different locations.
• And here we have it (drumroll 🥁) – in short, decentralized applications, or dApps, are software programs designed for end users which are not owned by any one central entity.
• To put it in more technical terms, a decentralized app operates on a blockchain or peer-to-peer network of computers. This means that there is no central authority that controls the dApp, and users can interact with each other directly. To use a dApp, you need to download the app’s source code, which is known as a smart contract. Smart contracts are self-executing contracts that are stored on the blockchain. This means that they are transparent and cannot be tampered with. When you use a dApp, you can make transactions without revealing your personal information. This is because the smart contract does not store any personal data.

This brings us to our next point, what are their advantages?

• Anti-censorship 🙅🏻‍♂️: Decentralized applications (dApps) make it more difficult for governments or individuals to exert control over the network, as described above. (FaceBook better watch out, dApps are coming!)
• No downtime 🔌: In a network outage, the peer-to-peer system ensures that dApps will continue to work.
• It is open source 🌏: Open source encourages the growth of the dApp ecosystem, as its source code is available to the general public for use or modification from its original design. This helps developers build better dApps with proper new functionality.

And disadvantages?

• They are prone to hacking 🤓: Because hackers can exploit open-source smart contracts, these benefits also come with drawbacks. There have been several high-profile hacks on popular dApps, such as EOS dApp, which lost nearly $1 million in 2018 alone to hackers.
• Usability issues 😵‍💫: Many dApps have a clunky user interface, but this defect gradually improves.
• They are user-dependent 👥: The more people use the dApp, the more efficient it is. On the opposite end, when only a few people use a distributed application, it won’t be easy to keep it secure.

Where do we see practical use cases for dApps?

• Cryptocurrency investments 💸 – dApps can be used to invest in cryptocurrencies. This is because cryptocurrencies are often built on blockchain networks, and dApps can be used to interact with these blockchain networks. For example, dApps can be used to buy, sell, and trade cryptocurrencies.
• Blockchain-based apps 🪩- dApps can also be used to create blockchain-based apps. These apps can be used to perform a variety of tasks, such as storing data, managing contracts, and voting. For example, Chainlink is a blockchain-based platform that can be used to connect real-world data to smart contracts.
• Property registrations 🏡 – dApps can be used to register property. This is because dApps can provide a secure and transparent way to record property ownership. For example, a dApp could be used to store the details of a property transaction, such as the buyer, seller, and property address.
• Tether 🇺🇸– Tether is a stablecoin that is pegged to the US dollar. This means that each Tether token is backed by one US dollar. Tether is a popular dApp because it allows users to store and transfer value in a way that is not subject to volatility.
• Gaming 🕹️ – dApps can be used to create gaming applications. These games can be played by users all over the world, and they can often be played for free. For example, the Sprinterlands card game is a dApp that allows users to collect and battle with digital cards.
• Collectibles 🃏 – dApps can be used to create collectible applications. These applications allow users to collect and trade digital items, such as Cryptokitties (a type of non-fungible token (NFT) that represent unique digital cats 😄).

Does the story of David vs Goliath ring any bells? Guess we will have to wait and see – grab the 🍿.

How do dApps make money?

• Token & ICO Launching 🪙 – Tokens are digital assets that can be used to power dApps, and they can also be traded on cryptocurrency exchanges. When a dApp launches an ICO, it sells tokens to investors in exchange for cryptocurrency. This can be a lucrative way to raise money for a dApp project, and it can also give investors a stake in the future success of the project.
• Membership or Subscriptions 📝 – A dApp could charge users a monthly subscription fee to access its features. This is a common model for dApps that provide access to premium content or services.
• Transaction Fees 💰 – When users interact with a dApp, they may be charged a fee for each transaction. This is similar to the way that credit card companies charge merchants a fee for each transaction. Transaction fees can be a significant source of revenue for dApps, especially those that are popular and have a high volume of transactions.
• Donations 🎁 – If a dApp is providing a valuable service, users may be willing to donate money to support its continued development. This is a common model for dApps that are used for charitable purposes.

Looking into a crystal ball, where do we see the future for dApps?

• More stablecoin-based dApps ⚖️ – The demand for stablecoins is expected to continue to rise in 2023. Stablecoins are cryptocurrencies that are pegged to a fiat currency, such as the US dollar or the euro. This makes them less volatile than other cryptocurrencies, and they are therefore seen as a more attractive investment option for some users. As the demand for stablecoins increases, we can expect to see more dApps that are built on top of them. These dApps will offer a variety of services, such as decentralized exchanges, lending platforms, and gaming platforms.
• More decentralized exchanges 🌐 –Decentralized exchanges (DEXs) are dApps that allow users to trade cryptocurrencies without the need for a centralized exchange. DEXs are becoming increasingly popular as users become more concerned about the security and privacy of their cryptocurrency holdings.
• Increased demand for crypto lending 📈 – Crypto lending is a service that allows users to lend their cryptocurrencies to others in exchange for interest payments. Crypto lending is becoming increasingly popular as users look for ways to generate passive income from their cryptocurrency holdings.
• Advanced gaming and gambling 🕹️ – Blockchain technology has the potential to revolutionize the gaming industry. It can be used to create more immersive and engaging gaming experiences.
• Metaverse-based dApps 👾 – The metaverse is a virtual world that is being built on top of blockchain technology. The metaverse has the potential to revolutionize the way we interact with the internet. (We are sure Mark Zuckerberg would approve this message)

Below are a few dApps that have caught our attention:

• Uniswap v3 – Uniswap v3 is an Ethereum-based decentralized exchange (DEX) that allows users to swap ERC-20 tokens.
• • It was released on March 23, 2021, and it includes a number of new features, such as:
    • Concentrated liquidity: With concentrated liquidity, liquidity providers can earn more fees with less capital, as they can focus their capital on the most liquid parts of the market.
    • Different fee classes: Allows liquidity providers to choose between three different fee classes, which essentially gives liquidity providers more flexibility in how they earn fees.
    • L2 Optimism: A scaling solution that enables near-instant transaction finality and low transaction feeswhile preserving the security guarantees of Layer 1 Ethereum.
  • We won’t get into the technical details here, but in addition to these new features, Uniswap v3 also includes a number of other improvements, such as a more intuitive user interface and better support for tokenomics.
    • Overall, Uniswap v3 is a significant upgrade to the Uniswap protocol. It offers a number of new features and improvements that make it a more attractive option for users who are looking to trade ERC-20 tokens.

• PancakeSwap – PancakeSwap is a decentralized exchange (DEX) that runs on the Binance Smart Chain (BSC).
  • PancakeSwap uses an automated market maker (AMM) to facilitate token swaps. This means that users can swap tokens without having to find a counterparty to trade with. It offers a variety of features, such as:
    • Swapping tokens: Users can swap one token for another token.
    • Yield farming: Users can stake their tokens to earn rewards.
    • Lottery: Users can buy tickets to enter a lottery and win prizes.
    • Prediction markets: Users can bet on the outcome of future events.
  • PancakeSwap is a popular DEX for users who want to trade tokens on the BSC. It offers a variety of features and low transaction fees, making it a good choice for both beginners and experienced traders.

• Step Hero – Step Hero is an online role-playing game (RPG) that uses non-fungible tokens (NFTs) to create a unique and immersive gaming experience.
  • The game is built on the Polygon and Binance Smart Chain (BSC) blockchains, which allows for fast and secure transactions.
  • The game’s combination of NFTs, PvP battles, and a player-driven economy has created a unique and engaging gaming experience.

• Cyclos – Cyclos is an automated market maker (AMM) that is built on the Solana blockchain.
• • Cyclos is similar to Uniswap V3 in that it allows users to swap tokens without having to find a counterparty to trade with. However, Cyclos has a number of features that make it unique, such as:
    • Concentrated liquidity: With concentrated liquidity, LPs can earn more fees with less capital, as they can focus their capital on the most liquid parts of the market.
    • Low transaction fees
    • Scalability
  • Overall, Cyclos is a promising AMM that offers a number of unique features. It is still under development, but it has the potential to become a popular choice for users who are looking to trade tokens on Solana.

• Curve Finance – Curve Finance is a decentralized exchange (DEX) that was founded by Michael Egorov in January 2020.
  • It is specifically designed for stablecoins, which are cryptocurrencies that are designed to maintain a stable value.
  • One of the key advantages of Curve Finance is that it is designed to minimize the impact of market volatility on stablecoin trades. This is because it uses a variety of different stablecoins to provide liquidity, which helps to stabilize the price of the tokens that are being traded.

And to wrap it all up

dApps are built on blockchain technology and use cryptocurrency as a means of exchange. They are designed to be open-source, transparent, and resistant to censorship, allowing users to interact directly with the application without intermediaries.

There are a few downsides to them as well, most notably their usability issues, their recent history of hacks along with their high user dependency. These downsides will need to be improved before they will be able to reach a wider target audience.

Nevertheless, they have a very wide use-case and they have the potential to disrupt traditional industries by allowing for peer-to-peer interactions and transactions without a central authority, which is a very clean and elegant feature. With that being said, we believe that dApps have a bright future. With continued development and innovation, dApps have the potential to revolutionize many industries and improve the lives of millions of people. Stay tuned.