The Role of Dapps in the Web3 Ecosystem
Over the years, Blockchain has evolved into a major tool in the quest for decentralization, unspooling never-seen-before use cases and functionalities beyond the world of finance. And as each day comes and goes, the horizon seems to stretch its skin much farther, extending towards democracy, Metaverse and Web 3.0.
One of these notable use cases is decentralized applications (dApps), otherwise known as “distributed applications’’. Such applications run on blockchain technology or distributed peer-to-peer networks with the help of smart-contracts. This means that DApps do not run on a single host but instead build on the processing power of numberless hosts of computers around the world within a more efficient, reliable and censorship-free environment.
Smart contracts refers to computer programs that automatically function when certain predefined terms and conditions are duly met. These codes, matter-of-factly, are difficult to alter or destroy.
Decentralized Applications Vs Centralized Applications
Most web applications store data on centralized servers, which make users lose custodial authority over their data. Social media networks like Twitter and Facebook, streaming platforms or banks store information on a single server; and this makes the accessibility of the user heavily dependent on the verification mapwork of the network that keeps checking and rechecking the user’s credentials for validity. And these in-processes are sometimes overstretched and frustrating.
With the user data being centralized, a single compromise of the server will lead to the shutting down of the entire application network. Not only that. Individuals and companies are also far more susceptible to hacks, content leakages, or exploitative malwares. Needless to talk about how traditional Big Tech companies profit from users’ content without any form of notification or compensation as well.
DApps, on the other hand, eliminate the shortcomings of traditional or centralized applications. They give their users custodial authority over their content, never dictating how they can share it. You do not have to submit their real-life identity information to access a decentralized application. Instead, DApps leverage on smart contracts to control their bidding. They also utilize consensus mechanisms to verify the validity of transactions. The whole network is responsible for verification during each transaction happening on the decentralized app.
With the blockchain networks distributed across multiple nodes, it’s very unlikely that the decentralized application will permanently go offline because there’s no possible scenario where the entire nodes will fail simultaneously. For example, if Facebook faces a major crash, since it’s stored on a centralized server, it’ll be difficult for users to access the network. But, in the case of a decentralized app, there’s no such thing as a breach of accessibility, even when the entire users are offline.
Another benefit of distributed applications is the easy integration of cryptocurrencies into the basic functionalities of the network. This cancels out any interference of third-party payment souvenirs who might charge outrageous fees for transactions, and are quite susceptible to numerous unhealthy risks.
Types of Decentralized Applications
Though all decentralized applications are similar in function, they can be categorized into three types depending on their layering protocol and unique use cases. Layering refers to “an organization of computer programs into separate functional components that interact in sequential or hierarchical systems.”
Type 1: These are the DApps built on Layer one. They exist on their own blockchain and require a consensus algorithm to function. The most popular example is Bitcoin, which is inarguably regarded as the first DApp.
Type 2: They are built on top of layer-one DApps, and also leverages their processing power. As protocols, these apps have utility tokens needed for them to pull through. For example, a lending platform might be built on Bitcoin, a layer-one decentralized app. And transactions will run on it before being transferred to the type 1 DApps, thereby reducing the workload of the main layer.
Type 3: They are built on top of layer two. They often serve as a bridge between the other types, creating APIs necessary for type 1 and type 2 to operate simultaneously. A good example is CrossFi. A lending and liquidity sharing platform built on Filecoin that gears toward connecting DeFi applications and providers on different multi-chains through leading technological incentives.
Use Cases of Decentralized Applications
Recent DApps exist as a bridge between the social web 2.0 protocols and the decentralized web 3.0. This simply means that they are accessible through social web navigators like Operamini, Chrome or Firefox but interact with underlying blockchain networks using smart contracts. While the front-end of DApps looks somehow similar, the backend dwells on a distributed network. Following this course, decentralized applications have a diversified ecosystem, stretching its innovative skin across different spheres beyond currency such as gambling, gaming, media, identity and many others.
To understand the role of decentralized applications in a decentralized economy, we must first fully delve into the use cases of DApps across these distinctive spheres.
DeFi applications have really transformed the global finance marketplace. Since it’s built on a decentralized blockchain network, anyone with a web browser and a strong internet connection can have access to it. Unlike centralized financial ecosystems that are overseen by intermediaries or third-party payment checkers such as banks, government and corporate bodies, decentralized financial system allows its users to purchase, lend or exchange cryptocurrencies, receive substantial rewards on digital assets, without having to face human-oriented errors and exploitative malwares that come with middlemen souvenirs. All you need to have is a working crypto wallet to start interacting with DeFI apps, becoming a participant in supported opportunities like NFT spaces, liquidity pools, swapping opportunities and the rest.
Another important example of financial DApps is the decentralized exchanges (DEX) like SushiSwap and PancakeSwap. These platforms allow p2p trading without giving up the custody of their assets to middlemen. Through the help of smart contracts, transactions can be overseen between two anonymous parties. These transactions, however, are done on-chain between the users’ crypto wallets. Compared to centralized exchanges, DEXs charge lower fees for all the transaction.
Social Media DApps
Just as the name implies, Dapps are focused on decentralization. Similar to popular social media networks like Twitter, Instagram and Facebook, social media DApps like Hive and Steemit foster online connection among its users. These social media networks that operate on centralized servers profit from people’s data and even go as far as monetizing it, thereby leading not just to a breach of user’s privacy but also the incurring of dire risks for the individual or company involved. A good example is the Cambridge Analytica scandal, where data was harvested and used for advertising during elections. Instead of abusing your right as a user by using your content without due consent or any form of compensation, social media DApps ensure that you are substantially rewarded for your data and as a participant in the network.
Gaming & NFTs
Decentralized gaming remains the most popular use cases of decentralized applications. CryptoKitties, the first game to launch on the blockchain network, was once reported to clog the Ethereum network because of its growing users. Many other popular decentralized gaming apps like Splinterlands, Axie Infinity, are sprouting in explosive manners, integrating digital collectibles (NFTs) to help users recover the value being generated in the Metaverse.
Decentralized applications are utilized across many spheres, be it healthcare or supply chain management schemes, or even in voting and governance. With the aid of smart contracts, these companies are able to uphold accountability as well as originality. And this helps to facilitate good service quality, reliability, and total cost-effectiveness. For instance, in voting, DApps can help eradicate issues of duplicity, fraudulency, or any internal or external altercations.
CrossFi Official Global Telegram Group: https://t.me/crossfimain_enlized applications is still in its nascent stage, which makes it susceptible to a host of experimental problems and issues such as poor scalability and lack of user-friendly interface. However, developers and creators are working towards curbing this malaise; and thereby enabling DApps successfully play a vital role in bridging Web 2. 0 experience and Web 3.0 functionalities.
CrossFi is a cross-chain protocol that provides liquidity to you for Filecoin staking and rewards.
CrossFi Official Website: https://crossfimain.com
CrossFi DApp Address: dapp.crossfimain.com
CrossFi Official Twitter Account: https://twitter.com/globalcrossfi
CrossFi Official Discord Group: https://discord.gg/UKGSX3VBY3
CrossFi Official Global Telegram Group: https://t.me/crossfimain_en