Cryptocurrencies and blockchains have garnered renewed interest in 2021.
Bitcoin prices have skyrocketed, and Dogecoin has become a popular token outside the crypto community. People have continued to use cryptocurrencies for trading and for crypto gambling at the best crypto casino. They also use tokens for cloud storage.
Blockchain technology has also seen a bump in interest. Many developers and tech enthusiasts are finding novel ways of leveraging smart contracts and tokenization.
At the same time, decentralized applications (dApps) have become more prominent. Developers launch projects quite often, and user adoption has also increased.
So let us look at what these applications are and review a few interesting and innovative projects run on various blockchains.
What Is A dApp?
A decentralized application is a piece of software that uses blockchain technology. It runs similarly to standard applications on mobile devices or the web.
The difference lies in the development of the application.
A decentralized application is open-source, which means that the source code is available to the public.
Secondly, it uses blockchain technology like smart contracts and consensus methods to run operations.
Thirdly, it runs a token system. Users receive tokens for performing specific actions on the application. This provides them with an incentive to continue using the application.
Lastly, there are no middlemen when it comes to generating new tokens. This means that the consensus protocol determines how users receive tokens.
What Are dApps Used For?
Developers have been creating dApps for almost any need. However, currently, most of them are related to finance. These could be loan systems or marketplaces for trading NFTs or cryptocurrencies.
There are also decentralized video games. They use consensus protocols to generate rewards for players. This extends to casino games too. They use a consensus algorithm for randomness in gambling games.
Additionally, developers have created search engines and decentralized cloud solutions. They differ from centralized applications on the web.
Which Blockchains Use dApps?
Ethereum, released in 2015, is the most popular blockchain for decentralized applications. At the time of writing, it is home to over 2,000 dApps. These applications have helped Ethereum’s native token, Ether, rise in value over the years.
Due to its popularity and a large number of applications, Ethereum is slower than other blockchains. It uses the Proof-of-Work protocol. This requires miners to use lots of computing power to verify actions on the blockchain.
Accordingly, miners receive compensation for verifying and adding more blocks to the chain. They receive “gas” in the form of Ether (ETH). Currently, gas fees are pretty high because it takes a while for miners to add blocks.
NEO, another blockchain, attempts to speed up the transaction process. It has an average of 400 transactions per second (TPS) compared to Ethereum’s 15 TPS. NEO has 70 dApps.
Though it is faster than Ethereum, NEO has high fees. Sometimes these fees can be higher than those on Ethereum.
TRON, a newer blockchain, is faster and offers its users lower fees. It has been touted as an Ethereum killer because it is the most popular blockchain for crypto gambling sites. This blockchain can process around 300,000 transactions per day. This makes it great for resource-intensive decentralized gaming applications.
Lastly, EOS is a fast-growing blockchain. It was released in 2018, and it has over 50,000 daily users. It offers the similar benefits as TRON, including fast transaction speeds and low fees.
Five dApps To Try In 2021
The following decentralized applications leverage blockchain technology. They want to provide their users with novel methods of receiving loans, collecting and trading NFTs, and make DeFi (Decentralized Finance) accessible to the masses.
CryptoKitties is the first dApp to gain massive popularity among the crypto community. It launched in 2017 and continues to be a popular application.
Developed by Axiom Zen, this entertainment application is a game where players collect virtual cats, which they can trade and breed with other players.
CryptoKitties uses a smart contract to create unique virtual cats. They have different colors, fur, and even eyes. The application uses a genetic algorithm to generate this level of uniqueness.
Accordingly, some cats are more valuable than others. This means that some players are willing to pay money to collect a particular cat. Some people have spent over $100,000 to own a unique cat.
CryptoKitties hold value within the application but are not the same as Bitcoin or Dogecoin. CryptoKitties owners cannot trade their unique cats for other cryptocurrencies. But people are willing to pay fiat currencies for them. They are blockchain assets.
CryptoKitties are ERC-721 tokens. The Ethereum blockchain generates them as unique tokens. This means that each generated token is unique and independently verified. This differs from ERC-20 tokens, which are identical. Hence, CryptoKitties are Non-fungible tokens (NFTs).
Collecting CryptoKitties might be fun for some users, but their actual value lies in the CryptoKitty Marketplace. Here CryptoKitty owners can list cats from their collection and sell them for ETH.
CryptoKitty differs in price according to its rarity. There are 50,000 generation-0 cats. The developers first created these cats in 2017. They are the rarest and fetch a hefty price on the CryptoKitty Marketplace.
The InterPlanetary Search Engine or IPSE is a decentralized search engine. It rivals popular search engines like Google or Bing because they own personal data and sell it to advertisers. On the other hand, decentralized search engines want to put an end to this and give benefits to advertisers.
As far as dApps go, this one is based on IPFS (InterPlanetary File System) and EOS. It gives users features not found on traditional search engines.
Firstly, it provides data ownership protection.
This means that users do not need to store their data with internet companies like Google. Instead, they can use decentralized storage solutions to store their data, giving them full ownership of it.
They can also manage their privacy preferences and dictate what data they want to share.
Secondly, it provides users an incentive for sharing data.
If they want to share their standard material data and their own preference data, they receive POST tokens for uploading and sharing it.
Thirdly, IPSE also has benefits for advertisers.
They can locate customer preference data with a smart contract and pay a fee for obtaining it. The EOS blockchain handles these transactions, so there is no intermediary between the customer and the advertiser. This is a more transparent method for advertisers to get customer data.
Lastly, EOS has a native token system. And users can receive rewards for performing actions in the application. For example, they can receive compensation for liking a social media post or sharing their own content.
IPSE is the next step for search engines on Web 3.0. It does not rely on large data centers, which consume massive amounts of electricity. It uses nodes in a blockchain network. This allows scalable data storage and will enable users to own their data while making it available to others.
OpenSea is a decentralized marketplace that allows users to trade NFTs from crypto games. NFTs have garnered much attention from the crypto community and internet users. These unique tokens range from collectible NBA highlights or artworks.
Currently, OpenSea only supports Ethereum based collectibles, but there are plans to extend the marketplace to other blockchains. Smart contracts handle the transactions, so there are no middlemen.
Users only need to connect their Ethereum wallet to the OpenSea website to begin trading NFTs. The Marketplace boasts over 4 million NFTs. Users can use Ethereum tokens to bid on NFTs. These include ETH or DAI (a stablecoin).
OpenSea also allows users to create their own NFTs without knowing how to code. They only need to access the Create tab on the OpenSea website.
OpenSea takes a 2.5% commission for every transaction on the website. Additionally, due to Ethereum’s high gas fees, NFTs go through blockchain verification only when someone accepts a bid for it.
Some NFTs have higher transaction fees than others. This is because on top of OpenSea’s cut, some artists get a commission from their NFT sales, adding to the total end amount. Videogame developers also receive a commission for video game NFTs.
Furthermore, customer service on OpenSea does not have many issues because the website is not responsible for transactions, and it has no power to reverse or cancel transactions. They also do not own any of the NFTs listed on the website.
In summary, OpenSea has one of the lowest commission rates for NFT marketplaces. It also has a large variety of NFTs to bid on. But OpenSea does not allow users to purchase NFTs using fiat currencies. Other marketplaces do offer this feature.
Uniswap is a decentralized exchange (DEX). This means there is no central authority controlling the platform. Traders use their Ethereum wallets to buy or sell Ethereum-based tokens and there is no central order book.
Also, users do not need to adhere to KYC protocols. All transactions go through smart contracts on the blockchain. This makes trading cheaper and faster.
Uniswap uses an automated market maker (AMM). This AMM uses liquidity pools and oracle price data to give traders the best available prices according to the market rates.
Moreover, Uniswap employs liquidity pools to keep a steady supply of tokens in the exchange. For example, if a user wishes to trade ETH for DOGE (Dogecoin), they need to join an ETH – DOGE liquidity pool. Every time the number of tokens in a liquidity pool increases, so does its price. This way, Uniswap can always provide liquidity.
Liquidity pools operate with liquidity providers. They deposit tokens in the liquidity pool. When they do, they receive a liquidity token. This is a record of how much they deposited in the liquidity pool. They can redeem these tokens at any time.
Uniswap charges a 0.3% fee for every transaction and plugs the fees straight back into the market. Accordingly, the more transactions there are, the more liquidity providers receive from their liquidity tokens.
Uniswap is much easier to use than older decentralized exchanges. This is mainly due to liquidity pools and AMM. It has the largest market share of any DEXs and offers the widest variety of tokens.
Augur is a decentralized betting platform. As far as dApps go, this one allows users to make bets on real-world events like elections, sports, or stock market movements.
Wisdom of the Crowd’s premise is that a large sample size can provide more accurate predictions than a few experts. This means that Augur uses crowdsourced forecasts to determine odds on an outcome.
Augur is a prediction market platform that pays users for making predictions on an event. Users can create prediction markets on the platform, and they receive rewards. Also, those who hold REP (Augur’s native token) receive rewards for correct predictions.
To bet on the event outcome, users need to trade shares on the particular outcome. If someone bets that the Miami Heat will win the NBA championship, they buy shares in that outcome. Each share is worth 1 ETH.
Shares change in value depending on the odds of an outcome. If the odds are even, users only need to bet 0.5 ETH. If the event does not happen, the user loses the amount they bet. When they win, they receive 1 ETH.
Users can also sell their shares before the outcome happens. Odds might increase or decrease. So, users can profit in this way.
In summary, Augur is a dApp prediction platform. If it continues to improve in speed and usability, it could replace traditional futures trading platforms.
Blockchain technology has popularized the use of cryptocurrencies. And with the advent of Ethereum’s smart contract implementation, there are more use cases for blockchains.
dApps show that there are opportunities for game developers, artists, banks, and betting platforms. They can leverage these decentralized applications to offer more transparent services.