Decentralized Application (DApp)
A decentralized application (dApp) is an application that runs on a blockchain network rather than on centralized servers. Unlike traditional apps, dApps operate on a decentralized network, ensuring that no single entity has control over their operation or user data. They are a key component of decentralized finance (DeFi).
Key Features and Benefits of DApps
The main factor that differentiates dApps from their ‘legacy’ counterparts is the decentralized framework on which they run. DApps use blockchain and smart contracts to exchange data and give end users the relevant service. This means that ostensibly they have no barriers to entry, and anyone can run and interact with any dApp. It also makes them hard to shut down or to isolate or exclude a given subset of users.
DApps’ decentralized infrastructure does more than boost their censorship resistance. Data being distributed across a network of nodes means that there is no central control and thus no single point of failure. A dApp can keep running even if one or more nodes are compromised or shut down.
DApps achieve their use cases via the use of smart contracts — code which executes under predefined conditions to deliver a stipulated result. Programmed rules and other parameters are contained in these contracts, which also ensure that transactions are successful and remove the risk of human error by not relying on an intermediary.
DApp Drawbacks
DApps, while innovative compared to the permissioned, centralized apps which are widespread today, are not infallible.
For instance, the same decentralized infrastructure which allows them to operate also makes changing their rules or modus operandi much more difficult. Consensus is required, and nodes may differ on any suggested update or revision.
Nodes themselves are nonetheless required in sufficient numbers to maximize security — too few can leave a dApp open to manipulation.
DApps’ open-source code is rigorously vetted to ensure users do not suffer from unexpected security vulnerabilities, but bad actors can and do take advantage of weak points or loopholes. Once this happens, every user can end up impacted.
Read more about dApps with the TabTrader Academy’s dedicated guide.
