Are dApps Driving or Derailing Blockchain Adoption?

Published in

aelf

6 min readSep 7, 2019

DApps are potentially one of the most vital components to blockchain adoption. They are, in a sense, the real world encapsulation of adoption, they represent the transition from a piece of software to a solution.

What are dApps?

dApps is short for decentralized application. Any application that is running on a decentralized blockchain can theoretically be called a dApp. The majority of dApps are developed by 3rd parties or teams that are not associated with those who built the underlying blockchain.

A dApp is specific to an individual blockchain, although multiple variations can exist which are designed for different blockchains. Similar to an application can exist on windows and apple, it will have a separate installer, depending on the OS it is required to run on. In essence, the equivalent of a dApp is any application which you install on your pc or phone through an install file (although some exist as an interactive website), and the underlying blockchain is your specific device’s operating system.

Not Everything is a dApp

Some apps that are running on blockchain may not technically be classed as a dApp, since they may not be fully decentralized, such as IBM’s FoodTrust app which is an app running on a permissioned private blockchain. Generally speaking, a permissioned private blockchain inferrs limited or no decentralization and certain instances could simply be classed as a database.

In fact, one of the limiting factors to corporate or enterprise level adoption of blockchain technology is directly relating to a misunderstanding that any app utilizing blockchain must be fully decentralized and thus be public. This is simply untrue. In reality, an app running on blockchain can be a fully centralized database or a fully decentralized public ledger, and everything in between.

Rise of the dApp

The launch of Ethereum in mid 2015 with the inclusion of smart contracts created the environment that developers could properly design applications utilizing the characteristics of blockchain. Prior to this, the use case of blockchain was limited to financial transactions as an individually isolated and simple function. Not only did the inclusion of smart contracts allow for transactions to be linked together in an ‘if-then’ design, but it also spread the application potential throughout many other industries. It wasn’t until 2 years later when dApp development really took off with the hype of 2017. Another 2 years and dApp development is now the norm with most blockchain platforms having tens of dapps running on them daily.

Blockchain platforms that support dApp development now consist of Ethereum, Tron, EOS, IOST, WICC, STEEM, Ont, Neo, Loom, Tomo, Nas, Bos, POA, xDai, Klaytn, GoChain as presented by State of the Dapps and Dapp Review. Each of the websites list the majority of dApps that are live on these platforms with 3,021 and 3,113 dApps listed respectively.

Although Ethereum holds the most number of dApps, the number of active users are small compared with EOS who receive between 4–8 times as many users daily.

dApp Adoption

What is even more staggering is the fact that, according to the stats by both State of the Dapps and DappReview, there is only an average of 35–45 users per dApp, with EOS being the most successful platform seeing approximately 150 users per dApp.

This indicates that the success of many of these dApps are severely limited or not effective at all. In fact, according to DappReview, the top 5 EOS dApps make up over 70% of the active EOS users. To make matters worse, over half of the dapps fall under the casino and high risk category. This may also limit adoption to a large degree as many individuals and organisations may limit their connection with these dapps and potentially blockchain as a whole due to concerns over brand image and moral stances.

A concern with the current dApp situation is the mindset or image that this is giving the wider public. The high number of high risk and casino/gambling dApps could narrow the potential use case of blockchain in the public’s minds to only risky financial incentive programs. In reality, this is just one of many applications that this technology can be implemented in. Some of the biggest progress has been made by enterprises who do not seek to develop their application as fully decentralized.

The Australian Stock Exchange (ASX) are developing a new upgrade to their main platform, CHESS, through Digital Assets, a blockchain focused development company. This project, although well into development since the 2016 prototype development, is still not expected to be fully launched before 2021. This app will be available to thousands of organisations and brokers who are registered users on the platform, but the application will be managed and run by the ASX.

IBM have implemented their supply chain app called FoodTrust, in conjunction with Walmart, and have onboarded numerous clients across the industry globally, including the U.S., Europe and Australia. This application runs also runs as a permissioned private blockchain and is not decentralized at all.

Visa have launched Visa B2B Connect, a blockchain inspired network facilitating cross-border payments. The network has incorporated elements from Hyperledger and was developed in collaboration with IBM.

Most of the use cases developed by enterprises such as those above, will see much wider adoption by users globally, simply in the fact that blockchain is a part of a larger solution developed to resolve a specific issue. This is opposed to the majority of dApps which are developed in order to provide an application for blockchain without a specific issue they are resolving.

In terms of adoption, the time has passed when developing a dApp for the sake of showcasing blockchain technology is useful, but rather the focus should be more holistic with a company positioning themselves as a software solution for a specific industry or application with a blockchain focus. In addition, improvements need to be made in the fundamental public and private blockchain platform technology allowing the software solutions to be developed with exactly the need requirements. This is where aelf comes in, we are developing a platform which will provide a springboard for existing enterprises and software solution providers to develop their solutions with the right blockchain application, tailored to suit their needs.