Introducing Dapposit (and a bonus intro to web3)

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Coinmonks

6 min readSep 27, 2021

Last week, I launched my first dapp, which you can check out here (you must have a Metamask wallet installed for it to work). The elevator pitch: Dapposit provides residential renters a safer method to store their security deposits by escrowing the funds in a smart contract on the Ethereum blockchain. Only the renter is able to access the money in the first 4 weeks, so if he/she needs to pull back the deposit for any reason — particularly rental fraud — it is easy to do so. After 4 weeks elapse, only the landlord is entitled to withdraw the funds, so the deposit effectively transfers from the tenant to the landlord, automatically and securely.

For those new to web3, a “dapp” or decentralized app, is a permissionless application whose code runs on a distributed (peer-to-peer) computing structure, like Ethereum. What does permissionless mean? It means anyone can use it. No logins, subscriptions, or stealing your data.

Cool, cool. Let’s back up a minute. What is web3?? Oh, and, by the way, what were web1 and web2…?

In a nutshell: web 1.0, the first iteration of the Internet, saw a preponderance of landing pages serving static content. “Read-only” stuff, like news sites, were what went on there. Web 2.0 added a layer of dynamic and user-generated content (“read-write”). Think Facebook, YouTube, and Uber.

Web3 adds another layer: value. By definition, web3 includes a construct to associate monetary value with each user, as well as embedded architecture to transfer value from user to user. Cryptography is that architecture for Ethereum, and, for that reason, it has the benefit of being peer-to-peer, decentralized, and trustless. There is no person, company, or nation pulling the strings of Ethereum, and there will never be one. Just a network of miners who signal their cooperation by choosing to run the same software as each other every day. This is web3.

Back to Dapposit

OK… getting back on track. I decided to build a dapp that solves a real world problem. No yield farming, NFT’s, or metaverses involved. All those things are awesome, but what drove me to pursue the mysteries of web3 was its potential to change the world for the better immediately; that is, without having to convince the general public that pixelated cartoon profile pictures are cool, for example. Where Elizabeth Warren sees criminals and terrorists, I see the key to potentially solving some of the world’s most pressing issues, particularly those which require socioeconomic coordination across disparate groups of people.

Which brings me to my first order of business: solving rental fraud. Though it is a bit obscure, the numbers behind rental fraud are surprisingly large, and I’ll get to those.

Firstly, rental fraud is when a scammer solicits a person to rent a residential property he/she does not own. A rental fraudster might take a picture of a random house and create a Craigslist or Facebook post advertising “your next dream home” that becomes available for rent on the first of next month. Once someone reaches out in response, the “landlord” suggests the victim send a security deposit immediately, as there are a handful of other interested renters and there isn’t time to give every single one of them a tour. The security deposit is usually 1 month’s rent, and if someone is unfortunate enough to fall for this scheme the landlord absconds with the money.

Why would anyone fall for this? Well, the nation is in the midst of probably the worst housing shortage in at least 100 years. In places like Florida and Texas, where waves of in-migration has led to a seller’s market of epic proportions, decent homes receive multiple offers at or above asking price the same day they list. This dynamic has fed through to the rental market, where demand is growing even faster due to the shortage of affordable housing and the coming of age of the notoriously debt-laden millennial generation.

In this environment, rental fraud is a big problem. 43.1% of renters in the US have encountered a fraudulent listing and 5.2 million renters have been defrauded. Predictably, due to their worse economic circumstances and resulting desperation, this problem disproportionately affects younger generations, with 9.1% of all renters between 18–29 having lost money due to a rental scam.

Just as bad is the amount of legitimate business that is stifled due to a lack of trust between parties. In another life, I worked in the real estate industry, and had experienced firsthand difficulty in getting a unit rented through Facebook because a potential tenant thought I was a scammer. Really, I just wanted to fill a vacancy at a perfectly good unit, and even the threat of a scam stifled that transaction.

So, where do I come in? Dapposit provides the first trustless protocol for making residential security deposits. The landlord turns out to be a swindler? No problem. If the key transfer doesn’t happen as planned in the 4 weeks after making the deposit, the smart contract allows the tenant’s Ethereum address to retrieve the funds. On the other hand, if the keys are transferred properly, neither tenant nor landlord has to take further action, and the smart contract will switch ownership of the deposited funds to the landlord’s Ethereum address after 4 weeks automatically.

As per the web3 ethos, my code is all open source, and you can check it out here. Anyone can clone it, fork it, change it, or do whatever they want with it. My specific version of the code is running in the cloud on Heroku, so that stuff cannot be edited except by me.

The biggest (think multi-billion dollar) web3 protocols are also open source for anyone to play with. Uniswap handles billions of dollars of trades, Aave handles billions of loans, and anyone can look inside their code and see how it works. On the other hand, it took a Wall Street Journal investigative piece to get some insight as to how Facebook’s algorithm polarized American society beyond repair. This, in another lens, is why web3 is a quantum leap forward for the future of the Internet, and for the benefit of the people, is an inevitable movement.

Automatically generated email when a deposit is made.

Challenges

Do I expect masses of people to start making their security deposits using my dapp immediately? Absolutely not. Most people do not custody their own crypto. Said another way, if you keep your crypto balances on an exchange like Coinbase, my dapp won’t work for you. You must have control of your own private keys using a wallet like Metamask.

Additionally, tenants have little leverage to demand landlords switch to a crypto-based trustless protocol right now (due to the housing shortage). What’s more, the real estate business is mostly comprised of boomers who don’t understand or care to learn about crypto. The odds these types would be open to adopting a protocol like Dapposit to change the way they’ve done security deposits for decades are slim.

However, all of these things are changing. Every day, little by little, younger generations — ones that understand crypto and its benefits — are building wealth and gaining power. Additionally, Metamask’s monthly active users grew 18x in the last year; this technology is spreading like wildfire. Finally, hundreds of newly minted crypto millionaires have become single-issue voters in the wake of the SEC’s recent attacks in order to protect their life savings, a dynamic which over time should have some impact on political discourse. My prediction is that in a couple years, society will be ready to wholly adopt crypto, and I hope to be among the first to deliver turnkey solutions to make life better using it.

I write about topics I find interesting in crypto. Follow me on Twitter.

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Introducing Dapposit (and a bonus intro to web3)

Back to Dapposit

Challenges

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Written by R B