Decentralized application

Short description: Type of computer application

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A decentralised application (DApp,[1] dApp,[2] Dapp, or dapp[3]) is an application that can operate autonomously, typically through the use of smart contracts, that run on a blockchain or other distributed ledger system. DApps provide some function or utility to its users with less human intervention. Control over DApps is distributed to holders of tokens that represent ownership. Without any one entity controlling the system, the application is therefore decentralised.[4]

## Contents

* 1 Definition
* 2 Usage
* 2.1 Smart contracts
* 2.2 Operation
* 3 Characteristics
* 4 Trends
* 5 References

## Definition

DApps are conventionally open-source. Some DApps that are fully closed-source and partially closed-source also exist.[5] Bitcoin, the first cryptocurrency, is an example of a DApp.[6]

## Usage

DApps can be classified based on whether they operate on their own block chain, or whether they operate on the block chain of another DApp.

### Smart contracts

Main article: Finance:Smart contract

Smart contracts are programs which maintain data on the blockchain and to execute operations.[5] Multiple smart contracts can be developed for a single DApp to handle more complex operations.[5] Over 75% of DApps are supported by a single smart contract, with the remainder using multiple smart contracts.[5]

DApps incur fees paid to the validators of the blockchain, known as "gas", due to the cost of deploying and executing the DApp's smart contracts.[5] The amount of gas required of a DApp's functions is dependent on the complexity of its smart contracts.[5] A complex smart contract of a DApp that operates on the Ethereum blockchain may fail to be deployed if it costs too much gas, leading to lower throughput and longer wait times for execution.[5]

### Operation

Consensus mechanisms are used by DApps to establish consensus on the network. The two most common mechanisms to establish consensus are proof-of-work (POW) and proof-of-stake (POS).[7]

Proof-of-work utilises computational power to establish consensus through the process of mining.[8] Bitcoin uses the proof-of-work mechanism.[8] Proof-of-stake is a consensus mechanism that supports DApps through validators that secure the network by having a stake and percent ownership over the application.[8]

A Bitcoin mining rig composed of dozens of graphics processing units

DApps distribute their tokens through three main mechanisms: mining, fund-raising and development.[7] In mining, tokens are distributed as per a predetermined algorithm as rewards to miners that secure the network through transaction verification.[7] Tokens can also be distributed through fundraising, whereby tokens are distributed in exchange for funding in the initial development phase of the DApp, as in an initial coin offering.[7] Lastly, the development mechanism distributes tokens that are set aside for the purpose of developing the DApp through a pre-determined schedule.[7]

There are three main steps that always occur in the formation and development of any DApp: the publishing of the DApp's whitepaper, the distribution of initial tokens, and the distribution of ownership.[7] Firstly, the whitepaper is published, describing the DApp's protocols, features and implementation.[7] Then, required software and scripts are made available to the miners and stakeholders that support the validation and fundraising of the network.[7] In exchange, they are rewarded with the initial tokens distributed by the system.[7] Lastly, as greater numbers of participants join the network, either through utilisation of the DApp or through contributions to the DApp's development, token ownership dilutes, and the system becomes less centralised.[7]

## Characteristics

DApps have their backend code running on a decentralized peer-to-peer network, as opposed to typical applications where the backend code is running on centralized servers. A DApp can have frontend code and user interfaces written in any language that can make calls to its backend.

DApps have been utilized in decentralized finance (DeFi), in which dapps perform financial functions on blockchains.[9] Decentralized finance protocols validating peer-to-peer transactions, such as Aave Protocol, are expected to disrupt centralized finance and lower costs.[10]

The performance of a DApp is tied to its latency, throughput, and sequential performance.[11] Bitcoin's system for transaction validation is designed so that the average time for a block on bitcoin's blockchain to be mined is 10 minutes.[11] Ethereum offers a reduced latency of one mined block every 12 seconds on average (called Block Time). For comparison, Visa handles approximately 10,000 transactions per second.[11][12] More recent DApp projects, such as Solana, have attempted to exceed that rate.[13]

Internet connectivity is a core dependency of blockchain systems, which includes DApps.[11] High monetary costs also act as a barrier. Transactions of small monetary values can comprise a large proportion of the transferred amount.[11] Greater demand for the service also leads to increased fees due to increased network traffic.[14] This is an issue for Ethereum, which is attributed to increased network traffic caused by DApps built on the Ethereum blockchain, such as those used by Non-fungible tokens (NFTs).[14] Transaction fees are affected by the complexity of a DApp's smart contracts, and by the particular blockchain.[5]

## Trends

Ethereum is the distributed ledger technology (DLT) that has the largest DApp market.[5] The first DApp on the Ethereum blockchain was published on April 22, 2016.[5] From May 2017, the number of DApps being developed have grown at a higher rate.[5] After February 2018, DApps have been published every day.[5] Less than one fifth of DApps capture almost all the DApp users on the Ethereum blockchain.[5] About 5% of DApps capture 80% of Ethereum transactions.[5] 80% of DApps on Ethereum are used by less than 1000 users.[5] On Ethereum, DApps that are exchanges capture 61.5% of transaction volume, finance DApps capture 25.6%, gambling DApps capture 5%, high-risk DApps capture 4.1%, and games capture 2.5%.[5] By early 2025, NFTs and social dApps saw a 6–9 % increase in user engagement, even as DeFi dApp usage experienced modest decline.[15]

DApps have not achieved wide adoption. Potential users may not have the skill or knowledge to be able to effectively analyse the differences between DApps and traditional applications, and also may not value those differences. This skill and information can be difficult to access for mainstream users. Additionally, the user experience for DApps is often poor, as they are often developed to prioritize functionality, maintenance and stability.[16]

Many DApps struggle to attract users, particularly in their founding stages, and even those that attract widespread initial popularity struggle to retain it.[17]

A notable example was the DApp CryptoKitties, which heavily slowed down the Ethereum network at the height of its popularity.[18] CryptoKitties and another similar gaming-based DApp Dice Games have failed to attract similar traction since.[19][needs update]

## References

1. ↑ "CVC Money Transmission Services Provided Through Decentralized Applications (DApps)". https://www.fincen.gov/sites/default/files/2019-05/FinCEN CVC Guidance FINAL.pdf.
2. ↑ "IEEE DAPPS 2020". https://ieeedapps.net/.
3. ↑ "Introduction to dapps". https://ethereum.org/en/developers/docs/dapps/.
4. ↑ "Technical introduction to dapps" (in en). https://ethereum.org/developers/docs/dapps/.
5. ↑ 5.00 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08 5.09 5.10 5.11 5.12 5.13 5.14 5.15 Wu, Kaidong; Ma, Yun; Huang, Gang; Liu, Xuanzhe (2021). "A first look at blockchain-based decentralized applications" (in en). Software: Practice and Experience 51 (10): 2033–2050. doi:10.1002/spe.2751. ISSN 1097-024X. https://onlinelibrary.wiley.com/doi/abs/10.1002/spe.2751.
6. ↑ "Where did Bitcoins come from" (in en). August 17, 2021. https://timesofindia.indiatimes.com/business/cryptocurrency/where-did-bitcoins-come-from/articleshow/85390449.cms.
7. ↑ 7.00 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 Johnston, D., Yilmaz, S. O., Kandah, J., Bentenitis, N., Hashemi, F., Gross, R., ... & Mason, S. (2014). The General Theory of Decentralized Applications, DApps.
8. ↑ 8.0 8.1 8.2 Hazari, Shihab S.; Mahmoud, Qusay H. (2019). "Comparative evaluation of consensus mechanisms in cryptocurrencies" (in en). Internet Technology Letters 2 (3): e100. doi:10.1002/itl2.100. ISSN 2476-1508.
9. ↑ "Why 'DeFi' Utopia Would Be Finance Without Financiers: QuickTake" (in en). 26 August 2020. https://www.bloomberg.com/news/articles/2020-08-26/why-defi-utopia-would-be-finance-without-financiers-quicktake.
10. ↑ Ao, Ziqiao; Horvath, Gergely; Zhang, Luyao (June 2022). "Are decentralized finance really decentralized? A social network analysis of the Aave protocol on the Ethereum blockchain" (in en). Papers. https://ideas.repec.org/p/arx/papers/2206.08401.html.
11. ↑ 11.0 11.1 11.2 11.3 11.4 Cai, Wei; Wang, Zehua; Ernst, Jason B.; Hong, Zhen; Feng, Chen; Leung, Victor C. M. (2018). "Decentralized Applications: The Blockchain-Empowered Software System". IEEE Access 6: 53019–53033. doi:10.1109/ACCESS.2018.2870644. ISSN 2169-3536.
12. ↑ Lee, Timothy (2013). "Bitcoin needs to scale by a factor of 1000 to compete with Visa. Here's how to do it: The Bitcoin network can only handle 7 transactions per second. Visa can handle 10,000.". The Washington Post.
13. ↑ Prabhjote, Gill (15 September 2021). "It's DeFi season and things got a little too hot to handle for Solana and Arbitrum One as transaction volumes ballooned". Business Insider India. https://www.businessinsider.in/investment/news/solana-arbitrum-ethereum-networks-down-due-to-surge-in-transaction-volume/articleshow/86230919.cms.
14. ↑ 14.0 14.1 Donmez, Anil; Karaivanov, Alexander (2022). "Transaction fee economics in the Ethereum blockchain" (in en). Economic Inquiry 60: 265–292. doi:10.1111/ecin.13025. https://onlinelibrary.wiley.com/doi/epdf/10.1111/ecin.13025.
15. ↑ Wang, Jingyi (2025-01-31), "Taxation of Cryptoassets and Web 3.0", Web3 Governance (London: Routledge): pp. 25–45, ISBN 978-1-032-61897-5, https://doi.org/10.4324/9781032618975-4, retrieved 2025-07-29
16. ↑ Glomann, Leonhard; Schmid, Maximilian; Kitajewa, Nika (2020). "Improving the Blockchain User Experience - an Approach to Address Blockchain Mass Adoption Issues from a Human-Centred Perspective". in Ahram, Tareq (in en). Advances in Artificial Intelligence, Software and Systems Engineering. Advances in Intelligent Systems and Computing. 965. Cham: Springer International Publishing. pp. 608–616. doi:10.1007/978-3-030-20454-9_60. ISBN 978-3-030-20454-9. https://link.springer.com/chapter/10.1007/978-3-030-20454-9_60.
17. ↑ Mathias Bärtl. "A statistical examination of utilization trends in decentralized applications." Frontiers in Blockchain, 2023. [1](https://www.frontiersin.org/journals/blockchain/articles/10.3389/fbloc.2023.1206330/full)
18. ↑ "People have spent over $1M buying virtual cats on the Ethereum blockchain". 3 December 2017. https://techcrunch.com/2017/12/03/people-have-spent-over-1m-buying-virtual-cats-on-the-ethereum-blockchain/.
19. ↑ Vigna, Paul (29 May 2019). "CryptoKitties and Dice Games Fail to Lure Users to Dapps". Wall Street Journal. https://www.wsj.com/articles/cryptokitties-and-dice-games-fail-to-lure-users-to-dapps-11559122201.

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