Unlike Web2 apps, which store and run code on centralized servers, Web3 dApps (decentralized applications) execute code via smart contracts on decentralized blockchains like Ethereum.
Key Features of dApps:
- Token Integration: Most dApps issue cryptocurrency tokens for governance, interaction, and ecosystem security.
- Self-Custody Access: Users connect via Web3 wallets (e.g., MetaMask), retaining full control of private keys.
- Varied Centralization: While some dApps (e.g., OpenSea) have centralized elements, fully autonomous ones are called DAOs (Decentralized Autonomous Organizations), like LooksRare.
👉 Learn how to secure your crypto with self-custody wallets
History of dApps
1. Bitcoin (2009)
The first decentralized application, though limited to financial transactions.
2. Ethereum (2015)
Introduced Turing-complete smart contracts, enabling complex dApps across industries.
3. Modern dApps (2024)
Thousands exist, primarily in DeFi and gaming, with trends toward closed-source development.
5 Popular DeFi dApps & Use Cases
| dApp | Use Case | Key Feature |
|---------------|---------------------------|---------------------------------|
| Aave | Borrowing/Lending | Overcollateralized loans |
| Lido | Staking | Liquid staking tokens (LSTs) |
| 1inch | DEX Aggregation | Best-price swaps across DEXs |
| OpenSea | NFT Marketplace | Centralized but wallet-based |
| Ribbon | Options Strategies | Vaults mimicking options trades |
How dApps Work: Uniswap Example
- User Interface: Connects to Uniswap’s website.
- Transaction Initiation: Selects ETH/UNI swap.
- Smart Contract Execution: Accesses ETH/UNI liquidity pool on-chain.
- Validation: Nodes verify and immutably record the transaction.
Core Concept: dApps are interfaces for interacting with blockchain-hosted smart contracts.
Types of dApps
Decentralized Exchanges (DEXs)
- e.g., Uniswap, PancakeSwap.
Gaming
- Play-to-earn models with crypto/NFT rewards.
Social Media
- Censorship-resistant platforms like Steemit.
👉 Explore top DeFi dApps for 2024
Risks of Using dApps
Smart Contract Vulnerabilities
- Audit dApps before use.
High Gas Fees
- Ethereum transactions can be costly.
Impermanent Loss
- Risk for liquidity providers in DEXs.
FAQs
Q: How do dApps differ from traditional apps?
A: dApps run on decentralized networks vs. centralized servers.
Q: Can you earn money with dApps?
A: Yes—via staking, lending, or play-to-earn games.
Q: Are all dApps open-source?
A: No; some are closed-source despite Web3’s transparency ethos.