dApp

What is a dApp?

A decentralized application (dApp) is an application (app) composed of one or multiple smart contracts that run on a decentralized network and a front-end user interface.

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dApps backends are distributed across peer-to-peer networks and operate on blockchains rather than centralized servers. This decentralized nature provides greater security, ownership, transparency, accessibility, and resistance to censorship. 

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Difference between a dApp and an app

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The difference between dApps and traditional apps lies in their architecture and technology. 

Traditional apps run backend code on centralized servers or cloud platforms controlled by a single entity, such as Facebook or Google. In contrast, dApps run backends on decentralized networks, where no single entity controls the data or application logic, such as on Ethereum or ZKsync. 

For example, Instagram can censor or block user content on Meta’s servers, preventing certain posts or accounts from being viewed or shared. This centralized control allows for moderation based on corporate policies or external pressures, which may limit free expression.

Lens Protocol operates with a decentralized architecture, significantly reducing centralized control over user activity. While no single entity has complete governance over the network, it incorporates community-driven governance mechanisms. The protocol offers increased resistance to censorship compared to traditional centralized platforms, allowing users to interact with greater freedom. 

There are many technological differences between apps and dApps, including: 

Data storage and management

• Apps: Data is stored on central databases, owned, managed, and maintained by the application's owner.
• dApps: dApps store data on a blockchain, where each transaction is recorded in an immutable ledger. Smart contracts handle logic execution and state management, while decentralized storage solutions like IPFS or Arweave are used for storing large files.

Backend execution

• Apps: Backend code is executed using conventional programming languages like Python, Java, or JavaScript. Backend logic is updated and maintained by developers, with direct access to server resources.
• dApps: Backends are composed of smart contracts deployed on a blockchain usually written in Solidity, Vyper, or Rust. These immutable contracts ensure that contract logic cannot be tampered with post-deployment. Any updates or changes to the contract require deploying a new version entirely. For example, when Uniswap introduces new features or fixes issues, it releases a new version of the protocol (Uniswap V2, V3, V4). Each new version represents a separate smart contract deployment on the blockchain. 

User authentication

• Apps: User authentication relies on username-password combinations, managed by the application’s backend. OAuth or single sign-on (SSO) services like Google or Facebook are often used for streamlined access. In all cases however, this sensitive data is maintained on centralized databases.
• dApps: Cryptographic key pairs are used for authentication. Users sign transactions and interactions using private keys, proving ownership without revealing real-world identity or sensitive information.

Governance and control

• Apps: Centralized apps are governed by the organization that owns them. This organization can change application functionality, manage user data, and dictate rules without user consent.
• dApps: Governance in dApps is often managed by stakeholders through DAOs (Decentralized Autonomous Organizations), on-chain governance, off-chain governance, toke-weighted voting, and multi-signature wallets. These methods of decentralized governance allow users to have a say in how the dApp evolves, unlike traditional systems where decisions are made solely by a centralized organization.

Updates and maintenance

• Apps: Updates in traditional applications are handled by developers through server-side changes or client-side updates pushed to users.
• dApps: Because smart contracts are immutable once deployed, changes require deploying new contracts or using upgradeable contract patterns.

Cost structure

• Apps: Traditional app costs are typically associated with server hosting, data storage, labor, and maintenance. The application owner usually bears these costs, which are passed through users via subscriptions, product sales, or advertisements.
• dApps: While smart contract based applications save on costs associated with running a server, they still have to pay the costs associated with gas fees, contracts deployments, and people to improve, update, and enhance the application. These fees are usually offset to the users and paid at every transaction. Protocols can also offer gasless transactions by raising the service fees or employing other monetization strategies - like tokenomics, grants, and chain partnerships, in exchange for an improved user experience.

Security

• Apps: Centralized apps have a single point of failure, making them susceptible to hacking and data breaches. If a server is compromised or vulnerable and the code is exploited, all data can be exposed. Security depends on the robustness of firewalls, database encryption, and monitoring systems the application owner implements.
• dApps: Security relies on the decentralized, cryptographic properties of blockchain. Data is distributed across multiple nodes, eliminating a single point of failure. Smart contracts are often open-source and subject to rigorous auditing, making security vulnerabilities more transparent. While this reduces the risk of external hacking, vulnerabilities within the smart contract code itself can still pose significant security risks. Thorough auditing is essential to identify and fix potential flaws before deployment.

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Types and uses of dApps

dApps serve multiple functions. Here are a few popular categories and how they are used.

• Decentralized finance (DeFi) Allows users to lend, borrow, and earn interest on cryptocurrencies. It eliminates traditional financial intermediaries by enabling peer-to-peer transactions and automated smart contracts.
• Supply chain management: Track and verify product authenticity, enhancing transparency in sectors like food and luxury goods. By recording each step of a product's journey on a blockchain, these dApps create an immutable and auditable supply chain record.
• Metaverse and gaming: Virtual worlds where users can interact, socialize, work, create, and conduct transactions using digital assets. Metaverse dApps often integrate virtual reality with blockchain technology, enabling users to build worlds, own digital land, goods, and services.  Blockchain games are often built as unique metaverse worlds and allow players to own and trade in-game assets that hold real-world value, often through play-to-earn models. Smart contracts govern transactions, ensuring secure and transparent ownership of assets.
• Social media: Allow users to share content, communicate, and engage in social activities without centralized control or data exploitation. Social dApps often employ token-based reward systems to incentivize content creation and curation.
• Art and collectibles: Support the creation, sale, and trade of digital art and unique collectibles, often represented as non-fungible tokens (NFTs). These dApps enable artists to showcase and sell their work directly to collectors, leveraging blockchain technology to verify authenticity and ownership.

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Benefits of app decentralization

• Transparency: All transactions and data are recorded on a blockchain, ensuring visibility and allowing users to verify information and ownership independently. This also increases trust, especially in sectors like finance and governance.
• Security: While dApps leverage the underlying security of blockchain technology—such as distributed storage, consensus mechanisms, and cryptography—they are not inherently secure. The transparency and open-source nature of smart contracts mean vulnerabilities are visible to everyone, making dApps susceptible to exploits. A single vulnerability can lead to severe consequences, such as loss of funds. Secure coding and auditing are critical to reducing these risks.  
• Censorship resistance: dApps operate without central oversight and control, making them resistant to censorship. Data stored on a blockchain cannot be easily deleted or altered, ensuring accessibility regardless of external pressures.
• User ownership and control: dApps empower users by allowing them to maintain ownership of data and assets through cryptographic keys. This shift from centralized to individual control enables users to manage interactions directly and ensures their assets can be freely traded or transferred.
• Immutable: Once confirmed, data and transactions stored on a blockchain cannot be altered or deleted. Immutability ensures that records are permanent and tamper-proof, creating a reliable and unchangeable history of all activities within the dApp.

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How to develop a dApp 

Developing a dApp requires both front end web development skills and expertise in blockchain technology, smart contract development, and smart contract security. Learn best practices for developing secure dApps free at Cyfrin Updraft.