You may be familiar with web and mobile applications, but what’s a decentralized application—a dApp? A decentralized app is a digital application that operates in a decentralized way, typically using blockchain technology.

A growing ecosystem of decentralized applications is shaping the development of web3 and revolutionizing the internet. Keep reading to learn more about dApps, and find out how decentralized apps are empowering software developers and internet users.                                                                           

What is a dApp? 

A decentralized application—a dApp—is a software application that operates using blockchain-based distributed ledger technology. dApps differ from traditional software apps because they aren’t controlled by a single centralized server or entity. 

A decentralized app is typically controlled by a network of nodes, with individual nodes controlled by participants in the community supporting the dApp. A decentralized application may distribute responsibilities for operating the dApp across many nodes in the network. Some functions that can be decentralized include: 

• Server ownership and control
• Data protection and management
• Consensus mechanism execution
• Application governance

dApps can perform a variety of core functions across industries, although decentralized finance (DeFi) has been the focus for many early dApps. Decentralized apps can potentially disrupt many sectors and industries because they support direct transactions between any two peers. 

Decentralized applications are typically built atop smart contracts—code-based contracts that are published to a blockchain and can be programmed to execute automatically. Smart contracts are the blockchain tool that enable decentralized apps.

14 key characteristics of decentralized apps

Let’s learn more about dApps by exploring 14 important features. Keep scrolling to understand how decentralized apps differ from their centralized contemporaries.

1. Peer-to-peer technology architecture

dApps are defined by their peer-to-peer technology architecture, which enables users to interact directly and trustlessly via a blockchain network without the need for third-party intermediaries.

2. Immutability

Transactions and actions within a dApp are immutable just like any other transaction that’s published to a blockchain. Immutability prevents blockchain network participants from easily manipulating historical blockchain data.

3. Scalability potential

dApps frequently offer scalable solutions because of their structures as decentralized networks. With multi-chain support, a decentralized app may have higher scalability than any individual blockchain network on which it’s built.

4. Modular and composable architecture 

dApp architecture is often modular and composable, meaning that an app’s components can be combined or augmented to create more complex systems. Modularity and composability enable developers to more efficiently build upon existing dApps.

5. Interoperability 

Many dApps prioritize interoperability—the ability to integrate with many blockchains and decentralized apps. Interoperability is especially important in fragmented ecosystems like decentralized finance and web3.

6. High fault tolerance

The decentralized nature of dApps increases their fault tolerance. Networks that operate using multiple nodes are less likely to experience down time because they remain operational even if an individual node stops functioning. 

7. Transparency 

dApps are transparent because all actions and transactions that occur within a decentralized app can be permanently published to a blockchain. Transparency is core to the dApp development ethos, and fundamentally differentiates dApps from web2 software.

8. Decentralized governance

Many dApps support decentralized governance, which enables dApp stakeholders to directly influence the evolution of a dApp. dApps that are decentrally governed typically support a native digital token, and allocate voting power based on token ownership.

9. Open-source code

The code for decentralized applications is almost always open source—a characteristic of dApps that unlocks many benefits for developers. Open-source code may be reviewed more regularly, fosters community collaboration, and can enable rapid innovation. 

10. Token-based economics

A decentralized app can establish an economic system that centers around a programmable digital token. The digital token can be designed for maximum utility within the dApp’s ecosystem.

11. Support for incentive mechanisms

Many dApps use digital tokens to support incentive mechanisms that reward participation. Decentralized apps’ rewards systems can be structured to incentivize many different activities:

• Network operations
• Validation of transactions
• Content creation
• Participation in governance 

12. User-controlled data 

Decentralized applications typically enable users to fully own and control their data. Data sovereignty is a core feature that enhances user privacy and security, and sets dApps apart from most web2 software applications.

13. Censorship resistant

The decentralized structure of web3 apps makes them generally resistant to censorship by any central authority. Data and operational control are distributed widely across a decentralized app’s network.

14. Auditability

Decentralized applications are generally easy to audit. Security researchers can examine everything about a dApp including its source code, transaction history, and governance decisions.

A brief history of dApps

Are you interested in why dApps were created or how they are evolving? The shortcomings of centralized web2 apps have partially contributed to the emergence of dApps, although dissatisfaction with web2 is certainly not the only catalyst driving the continual expansion of the dApp ecosystem. 

Let’s explore the brief history of decentralized apps to understand how dApps are becoming increasingly diverse, functional, and user friendly.

2015

Gnosis is a dApp that launches to support decentralized betting on a wide range of events. The platform is plagued by a cumbersome onboarding process, a confusing user experience, and low liquidity due to insufficient user adoption.

2017

CryptoKitties—a game that enables users to collect, breed, and trade virtual cats—launches as a dApp. CryptoKitties gains immense popularity among blockchain enthusiasts, although dApps continue to lack broad utility and ease of use.

2018

AAVE emerges to support decentralized, peer-to-peer lending and borrowing. AAVE addresses many of the usability and accessibility issues that had plagued early dApps, garnering a substantial user base and setting a new standard for what is possible in decentralized finance.

2020

Curve Finance launches as a decentralized exchange that’s optimized for stablecoin trading. Curve supports simplified onboarding, an intuitive user interface, high liquidity, and other enticing features, creating a dApp experience that’s accessible to non-technical users.

2021

Decentralized applications proliferate to form a dApp ecosystem that is useful and user friendly.

• Audius launches a decentralized music streaming platform to increase artists’ control over their work and offer better compensation.
• Ceramic Network establishes a decentralized protocol for creating mutable documents on a blockchain.
• ArDrive launches as a decentralized cloud storage solution built atop the Arweave blockchain protocol. 
• Mirror creates a decentralized blogging platform to enable writers to directly monetize their work and even establish their own digital tokens.

2023 and beyond

Decentralized applications continue to become more user friendly and rich in features. The use cases for dApps continue to proliferate, and dApps are adopted by users across functions and industries. The increasing diversification and sophistication of dApps democratizes their appeal, spurring widespread use by a mainstream audience.

Decentralized apps are empowering internet users

dApps are empowering internet users everywhere to transact directly and regain control over their data. As the universe of decentralized apps grows and matures, a trustless ecosystem is forming to revolutionize many job functions and industries. Decentralized apps and their supporters are creating the next generation of the internet—with digital autonomy, privacy, and security as the top priorities.