A Decentralized Application (DApp) run on top of a blockchain in a peer-to-peer network. They represent the latest advancement in decentralization technology.
DApps at a fundamental level are software programs that execute using either of the following methods. They are categorized as Type 1, Type 2, or Type 3 DApps:
Type 1: Run on their own dedicated blockchain, for example, standard smart contract based DApps running on Ethereum. If required, they make use of a native token, for example, ETH on Ethereum blockchain.
Type 2: Use an existing established blockchain. that is, make use of Type 1 blockchain and bear custom protocols and tokens, for example, smart contract based tokenization DApps running on Ethereum blockchain.
An example is DAI, which is built on top of Ethereum blockchain, but contains its own stable coins and mechanism of distribution and control.
Another example is Golem, which has its own token GNT and a transaction framework built on top of Ethereum blockchain to provide a decentralized marketplace for computing power where users share their computing power with each other in a peer-to-peer network.
Type 3: Use the protocols of Type 2 DApps; for example, the SAFE Network uses the OMNI network protocol.
Another example to understand the difference between different types of DApps is the USDT token (Tethers).
The original USDT uses the OMNI layer (a Type 2 DApp) on top of the Bitcoin network. USDT is also available on Ethereum using ERC20 tokens.
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Requirements of a DApp
For an application to be considered decentralized, it must meet the following criteria:
1. The DApp should be fully open source and autonomous, and no single entity should be in control of a majority of its tokens. All changes to the application must be consensus driven based on the feedback given by the community.
2. Data and records of operations of the application must be cryptographically secured and stored on a public, decentralized blockchain to avoid any central points of failure.
3. A cryptographic token must be used by the application to provide access for and incentivize those who contribute value to the applications, for example, miners in Bitcoin.
4. The tokens (if applicable) must be generated by the decentralized application using consensus and an applicable cryptographic algorithm. This generation of tokens acts as a proof of the value to contributors (for example, miners).
Generally, DApps now provide all sorts of different services, including but not limited to financial applications, gaming, social media, and health.
Design of a DApp
Traditional apps commonly consist of a user interface and usually a web server or an application server and a backend database. This is a common client/server architecture.
A DApp on the other hand has a blockchain as a backend and can be visualized as depicted in the above diagram. The key element that plays a vital role in the creation of a DApp is a smart contract that runs on the blockchain and has business logic embedded within it.
Note that the frontend is either a DApp or app architecture can either be a thick client, a mobile app, or a web frontend (a web user interface). However, it is usually a web frontend commonly written using a JavaScript framework such as React or Angular.
The following comparison table highlights the key properties of and differences between different types of decentralized entities:
| Entity | Autonomous? | Software? | Owned? | Capital? | Legal Status | Cost |
| DO | No | No | Yes | Yes | Yes | High |
| DAO | Yes | Yes | No | Yes | Unsettled | Low |
| DAC | Yes | Yes | Yes | Yes | Unsettled | Low |
| DAS | Yes | Yes | No | Possible | Unsettled | Low |
| DApp | Yes | Yes | Yes | Optional tokens | Unsettled | Use case dependent |
DApp Examples
Examples of some DApps are provided here.
KYC-Chain
This application provides the facility to manage Know Your Customer (KYC) data securely and conveniently based on smart contracts.
OpenBazaar
This is a decentralized peer-to-peer network that enables commercial activities directly between sellers and buyers instead of relying on a central party, such as eBay or Amazon.
It should be noted that this system is not built on top of a blockchain; instead, distributed hash tables are used in a peer-to-peer network to enable direct communication and data sharing among peers.
It makes use of Bitcoin and various other cryptocurrencies as a payment method.
Lazooz
This is the decentralized equivalent of Uber. It allows peer-to-peer ridesharing and users can be incentivized by proof of movement, and they can earn Zooz coins.
Suryateja Pericherla, at present is a Research Scholar (full-time Ph.D.) in the Dept. of Computer Science & Systems Engineering at Andhra University, Visakhapatnam. Previously worked as an Associate Professor in the Dept. of CSE at Vishnu Institute of Technology, India.
He has 11+ years of teaching experience and is an individual researcher whose research interests are Cloud Computing, Internet of Things, Computer Security, Network Security and Blockchain.
He is a member of professional societies like IEEE, ACM, CSI and ISCA. He published several research papers which are indexed by SCIE, WoS, Scopus, Springer and others.
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