August 28, 2023 - 17 min read
Decentralized applications, or dApps, are applications that, instead of being stored in a central location, are stored on a distributed, decentralized blockchain network. Decentralized applications can run automatically and autonomously, without human intervention, since each dApp consists of one or more blockchain-based smart contracts.
While the Bitcoin blockchain itself is considered the first true dApp, the idea of multiple dApps running on the same blockchain first became popular with the growth of the Ethereum blockchain in 2016. Since then, the popularity of dApps has exploded, and as of 2022, the blockchain analysis company DappRadar tracked more than 12,000 dApps on over 50 blockchains.
Most decentralized applications are considered DeFi, or decentralized finance applications, including decentralized exchanges, borrowing and lending protocols, money market protocols, derivatives and synthetic asset creation and trading platforms, DeFi prediction markets, and decentralized insurance platforms. Other types of dApps include GameFi applications, which typically consist of play-to-earn (P2E) games, though new types of applications, such as healthcare dApps, are on the rise.
In general, dApps can be categorized into 3 types; type 1 dApps, like Bitcoin, have their own blockchain, type 2 dApps, like Uniswap, are built on top of an existing blockchain, while type 3 dApps are built on top of type 2 apps.
In this article, we’ll review and examine 20 examples of popular dApps, including information such as their function, growth, popularity level, industry impact, and more.
Lido is currently the world’s largest decentralized proof-of-stake staking protocol, where users can stake Ethereum and various other PoS cryptocurrencies, including Solana, Polygon, Polkadot, and Kusama. Lido, unlike some staking protocols, allows for liquid staking, meaning that users do not have to lock their tokens in a smart contract to stake their ETH on the platform. When users stake their ETHon Lido, they receive a tokenized version of their ETH (stETH). It’s also possible to stake stETH on other DeFi platforms to receive additional yield by using it as collateral for a loan or engaging in yield farming.
Lido is governed and managed by Lido DAO, which uses the platform’s naive LDO as a governance token. Each LDO token grants an individual one vote. As of mid-to-late 2023, LDO had a market cap of over $1 billion and was ranked in the top 40 tokens and cryptocurrencies by market cap. Lido plays a particularly important role in the broader Ethereum and DeFi ecosystem, as it reduces the barriers to staking ETH. If they don’t use a staking pool platform like Lido, individuals must stake a minimum of 32 ETH to operate a single node. With ETH prices ranging from $4,000+ to slightly under $1,000 from early 2022 to late 2023, ETH is staking out of reach for most people, as total startup costs could range from $32,000 to $128,000. In contrast, Lido has no minimum staking amount. However, just like engaging in any other DeFi protocol, using Lido does have some risks, including the potential for smart contract bugs and DAO governance issues.
Uniswap is the world’s largest decentralized crypto exchange or DEX. First launched in 2018, Uniswap uses automated liquidity pools to facilitate fast and reliable trading on the exchange. Liquidity providers (LPs), users who decide to stake their money into Uniswap’s smart contracts to receive rewards, provide most of the liquidity for the exchange. When they place their funds into a Uniswap smart contract, users receive a token representing their contribution to a liquidity pool, and they can redeem that token for a share of the exchange’s trading fees. Uniswap charges a 0.30% fee for each trade, funds that are automatically sent to a liquidity reserve to compensate liquidity providers.
Instead of the traditional order book system used on centralized exchanges and traditional stock and commodities exchanges, Uniswap uses an automated market maker (AMM) model to determine asset prices. In order book systems, the price is determined by the highest buyer and lowest seller. In contrast, in an AMM-based system, the price of an asset is determined by a mathematical formula based on the asset’s current supply and demand. Uniswap also benefits from arbitrage traders, who bring more liquidity to the exchange and, through their trades, bring Uniswap’s asset prices more in line with that of the overall market.
Since Uniswap is a DEX, it never actually holds on to a user’s tokens or cryptocurrency. This makes it a more secure choice than centralized exchanges, at least for individuals and entities that responsibly manage their wallets and private keys. Since Uniswap’s smart contract(s) enables automated swaps between wallets, users will have to pay gas fees alongside exchange fees to execute trades.
Like many DeFi platforms, Uniswap is a DAO governance by a token, in this case, UNI. UNI is also, as of mid-to-late 2023, a top 20 cryptocurrency in its own right, and, despite competitors like Sushiswap, Uniswap still remains the world’s leading DEX
AAVE is currently the DeFi industry’s top decentralized borrowing and lending platform. AAVE is a P2P, smart contract-based lending ecosystem that connects borrowers and lenders, allowing borrowers to take out overcollateralized cryptocurrency loans. This means that a borrower needs to deposit more crypto than they want to borrow, increasing the margin of safety for lenders. If the collateral value a borrower has provided drops below a certain loan-to-value (LTV) ratio, the platform will automatically liquidate up to 50% of the borrower’s collateral to re-establish an ideal collateral ratio. In general, users can borrow up to 80% of their collateral.
On the other side of the equation, much like a DEX, lenders using AAVE deposit crypto into liquidity pools and earn interest based on borrower interest payments. Lender deposits provide fixed and variable APYs (annual percentage yields) between 2-30%+, paid out in the same crypto the borrower deposits into the liquidity pool. Currently, AAVE allows users to lend and borrow assets, including ETH, DAI, USDC, and UDST, as well as AAVE’s native token, AAVE.
In addition to traditional borrowing and lending, AAVE allows borrowers to take out flash loans, which are borrowed and repaid in the same transaction. Flash loans are specifically designed to allow traders to utilize arbitrage strategies, such as asset price differences on different exchanges, to make a quick profit. Like other DeFi platforms, AAVE is governed by its native AAVE token, which can be staked to allow users to gain additional yield.
Curve is a popular DEX using an automated market maker (AMM) system. However, it operates quite differently than other DEXs. Unlike platforms like Uniswap, which emphasize asset variety rather than price stability, Curve focuses mainly on stablecoins rather than more volatile crypto assets. This is done by creating liquidity pools that are either composed of very similar assets, like fully-collateralized stablecoins, or a single asset, such as wrapped Bitcoin (wBTC).
By constructing these low-volatility liquidity pools, Curve can reduce their fees and slippage levels, and reduce impermanent loss, making the platform ideal for certain types of traders and DeFi investors. For example, Curve may have a pool consisting of multiple stablecoins, such as DAI and USDC. When “too much” of an asset, like UDSC, is added to the pool, the price of that asset begins to sell at a discount, which traders will take advantage of by buying it and selling it on other exchanges, leading to the pool automatically balancing itself without manual intervention.
While it’s true that assets like wBTC are highly volatile compared to stablecoins, the same method still works because tokens in a Curve liquidity pool don’t actually need to be stable. Instead, they only need stability compared to the other tokens in the same liquidity pool.
Axie Infinity was once the most popular blockchain-based game in the industry. While its popularity has cooled significantly, it’s still an influential game with a popular governance token. Axie, which many say was inspired by Pokemon, allows players to purchase NFT monsters and battle with other players to earn SLP tokens. At one point, tens of thousands of players in lower-income countries like the Philippines decided to quit their full-time jobs to play the game full-time since it often paid better than many traditional jobs. However, since the token’s price has declined significantly in the last year, this is no longer viable for most, causing many full-time players to ditch the game altogether.
In addition to a tanking token price, Axie has faced criticism over the quality of the game as a whole, with many critics claiming the gameplay process is boring and repetitive. In addition, many current and former players have admitted that they only play the game for profit, not fun. This doesn’t bode well for Axie’s future; however, if the game’s creators at Sky Mavis can significantly improve it before crypto’s next bull run, they may have a chance to revive it to at least a significant portion of its former glory.
MakerDAO is one of the most ambitious DeFi projects ever, as it aims to become a leading decentralized reserve bank with the capacity to revolutionize real-world finance (not just DeFi). MakerDAO, which is hosted on the Ethereum blockchain, issues the over-collateralized DAI stablecoin.
To mint the DAI stablecoin, users need to lock a certain amount of ETH in a smart contract, creating a CDP or collateralized debt position. Currently, users can borrow DAI worth up to 66% of their collateral (a 150% collateralization ratio). For instance, if a user wants to mint $1,000 in DAI, they must deposit around $1,500 in ETH into a Maker smart contract. Users can also use other types of collateral to mint DAI, including USDC, wBTC, MATIC, MANA, and LINK, each of which has different collateralization ratio requirements based on their perceived risk and volatility. For instance, USDC, which is much less volatile than ETH, only requires a 125% collateralization ratio.
In addition, MakerDAO permits individuals who mint DAO to deposit it into the DAO’s bank to earn interest on their DAI. DAI interest levels are calculated using a metric called DSR (DAI Savings Rate).
The MakerDAO ecosystem is governed by MakerDAO, which utilizes the protocol’s native MKR token. Token holders can vote on the bank’s operational policies, including determining what kind of assets can be used as collateral, revising total debt limits, and helping to determine interest rates.
MakerDAO-powered lenders have even issued real-world loans, including a $7.8M loan for a Tesla repair center in California, so this protocol will likely continue to have an increasing impact on the traditional financial system.
Synthetix is a popular DeFi platform that allows users to buy, sell, and trade synthetic assets. These assets track the price of both cryptocurrencies and real-world assets without actually having to hold the assets directly. The Synthetix ecosystem permits users to purchase and trade various unique financial products called “synths.” These synths include synthetic inverse cryptocurrencies (products that rise in price when the asset falls in price, and vice versa), synthetic fiat currencies, like dollars and Euros, synthetic crypto indexes, and synthetic commodities like gold and silver.
While Synethix is the name of the underlying protocol, asset trading actually occurs on Kwenta, Synthetix’s native DEX. Kwenta does not use an order book trading system or an AMM and uses P2P (peer-to-peer) trading powered by decentralized oracles used for price discovery. Synthetix is governed by SNX (Synthetix Network Token), which acts as a governance token and provides collateral against Synths issued by the platform.
Users can stake their SNX tokens and receive a large portion of the 0.3%-1% fees that are levied on each trade on Kwenta.
In addition to trading on Kwenta, users can deposit their Synths into liquidity pools on platforms like Uniswap and Curve to earn additional yield.
Synthetix’s governance system is somewhat complex, and the platform is currently governed by three distinct DAOs. The protocolDAO votes on various upgrades to the protocol’s smart contracts and blockchain infrastructure, the grantsDAO issues funds for developers who want to help create new upgrades to the platform, and synthetixDAO votes on funding larger entities who want to advance the development of the core Synthetix ecosystem.
When it comes to top DEXs by volume, PancakeSwap is currently right behind competitors Uniswap and SushiSwap. Unlike these other DEXs, however, PancakeSwap was built on BNB Smart Chain (previously Binance Smart Chain). Much like other AMM-based DEXs, PancakeSwap uses liquidity pools and has a native token, CAKE, which can be staked in special liquidity pools called SYRUP pools. Current trading fees on the exchange are 0.2%.
PancakeSwap also stands apart from other decentralized exchanges due to its gamification approach. For instance, protocol users can win special NFTs that can be staked to win extra awards. In addition, PancakeSwap runs multiple daily lotteries, giving out these special NFTs as rewards.
PancakeSwap also operates its own IDO/ICO launchpad. However, it calls these raises IFOs, or initial farm offerings, since the focus is not just on buying new tokens but yield farming with these tokens to gain extra awards.
Splinterlands is one of the most popular decentralized, NFT-based blockchain games today. Built on the Hive blockchain, Splinterlands is a digital card trading game that allows players to trade more than 280 collectible NFT cards. These cards have significant in-game utility, allowing players to increase their character’s stats and overall strength with factors such as speed, armor, and various types of attack abilities, like magic, ranged, and melee. The game allows players to engage in tournaments, ranked play, and quests, allowing players to gain additional rewards.
While many NFT games don’t have a high level of interoperability, Splinterlands is compatible with various other chains, such as Ethereum, Wax, and Tron. Since Splinterlands is built on the relatively fast and efficient Hive blockchain, developers can make frequent upgrades without seriously slowing down the game or passing on significant costs to players.
Steemit is currently the world’s largest decentralized, blockchain-based social media platform. Steemit is built on its own custom blockchain, the Steemit blockchain. Currently, there are over 300 dApps on the Steemit blockchain, such as Utopian, which helps crowdfund open-source blockchain development projects, and DTube, a video uploading and sharing app somewhat similar to YouTube or Vimeo.
What differentiates Streemit from traditional social media apps is that it rewards users for creating engaging content by giving them rewards in the form of the platform’s native STEEM token. Users can upvote posts, and the users with posts with the most upvotes and likes receive a certain amount of STEEM rewards. To do this, the platform uses a “Proof-of-Brain” rewards algorithm that distributes tokens based on the aforementioned number of likes and upvotes.
In addition, Steemit allows users to create unique social media ecosystems by launching their own Smart Media Tokens (SMT tokens), which also use the “Proof-of-Brain” rewards algorithm.
DeFi Kingdoms is another extremely popular blockchain play-to-earn (P2E game). Built on the Harmony One blockchain, the game combines medieval-themed RPG gameplay with unique NFTs and a specialized DEX (based on Uniswap V2) that allows players to trade and swap their in-game NFTs easily.
DeFi Kingdoms can be compared to early versions of RPG games like Runescape, as it allows players to explore a virtual world filled with banks, taverns, gardens, and other interesting locations. In-game NFTs come as “Heroes,” characters that can fight enemies and earn resources, all while getting stronger with stats like mana, wisdom, agility, and stamina. Users can play the game directly through their browser or through MetaMask’s mobile app. In addition to buying and selling heroes, users can rent them from the in-game Tavern, stake their coins through the game’s Bank, and pool their tokens inside the game’s Gardens.
DeFi Kingdoms uses the JEWEL token as a governance token and an in-game currency.
Alien Worlds is a multi-chain, NFT-focused blockchain game currently hosted on the Ethereum, BNB Smart Chain, and WAX blockchains. Players, which are called “Explorers,” can earn resources by buying and renting NFT land and NFT tools, mining resources, as well as voting on the game’s governance and token payout systems. Alien Worlds is governed by the Trillium (TLM) token and allows users to stake their Trillium tokens to vote in one of the game’s multiple Planet DAOs.
In addition to earning tokens in Alien Worlds itself, players can also earn tokens in Minecraft, which has already had a major impact on the game’s expansion.
Compound is a popular, decentralized crypto borrowing and lending platform that allows users to borrow and lend assets, including Ether (ETH), Wrapped BTC (WBTC), USD Coin (USDC), Tether (USDT), Dai (DAI), Ox (ZRX), Augur (REP), Sai (SAI), and Basic Attention Token (BAT).
Locking your crypto in a Compound smart contract allows you to earn interest denominated in the same crypto you lent to the platform. Like most other crypto borrowing platforms, the amount a borrower can borrow is determined by the risk of the asset, with higher maximum LTVs allowed for safer assets, like stablecoins like USDC, and lower LTVs allowed for more volatile tokens, like Basic Attention Tokens.
Compound is governed by the COMP token, which allows users to vote on important aspects of the platform, such as its reserves and treasury. In addition, a small amount of COMP is distributed to all borrowers and lenders daily, proportional to the amount of interest earned by each asset.
Decentraland is perhaps the world’s most popular virtual NFT-based land game. Based on the Ethereum blockchain, Decentraland is both a VR platform and an open-world metaverse. Decentraland is governed by the Decentraland DAO, which itself is controlled by the holders of the protocol’s native LAND token. Decentraland became famous in 2021 and 2022 for its’ incredibly high virtual land prices, with one piece of virtual NFT land selling for $3.5 million. In addition to buying and selling virtual land, Decentraland players can buy and sell digital NFT wearables for their avatars, socialize, play in-game games,
X2Y2 is a fast-growing NFT marketplace with various popular features, including profit sharing, rarity tracking, real-time notifications, and bulk listing. Regarding profit sharing, users who stake the protocol’s native X2Y2 get a certain percentage of all NFT trading fees on the platform. Bulk listing allows users to save a significant amount of gas, as they do not have to pay for each individual listing. In addition to bulk listing, users can purchase NFTs in bulk, saving gas fees by allowing users to purchase many NFTs in a single transaction. Plus, X2Y2’s real-time notification system can automatically email users to inform them of bids or purchases.
Finally, X2Y2’s rarity tracker helps provide detailed analytics and price history data for each NFT on the platform. In the future, the platform plans to focus on privacy and enable the trading of secret NFTs.
Sudoswap is a popular DEX, but unlike DEXs like Uniswap, Sudoswap focuses specifically on NFTs rather than fungible tokens or cryptocurrencies. Like most other DEXs, Sudoswap uses liquidity pools and the automated market maker (AMM) model instead of the order book model to determine the price of NFTs. The platform is known for reducing NFT price volatilities and permitting freedom from censorship, as users can trade any kind of NFT using the platform, free from the restrictions of centralized NFT marketplaces like OpenSea or Rarible. However, unlike some NFT marketplaces and platforms, Sudoswap does not pay creators royalty fees when a new owner purchases an NFT. Sudoswap is currently governed by its native Sudoswap (SUDO) token.
Frax Finance is a blockchain-based ecosystem focused on the development and distribution of FRAX, a partially-collateralized algorithmic stablecoin. Since FRAX is an algorithmic stablecoin, the protocol allows users to trade their FRAX tokens for the same amount of the protocol’s governance token, FXS, which, due to the actions of arbitrage traders, is intended to create long-term price stability for the FRAX stablecoin.
Like MakerDAO, Frax allows users to mint coins by providing different amounts of cryptocurrency; however, unlike MakerDAO’s DAI stablecoin, which is overcollateralized, FRAX is only partially collateralized. This means that FRAX is a significantly riskier stablecoin than competitors like DAI or USDC; however, FRAX’s partial collateralization does allow the Frax ecosystem to grow faster.
Crypto gambling has never been more popular, and perhaps that’s why Metawin, a leading crypto casino, has never been more popular. Metawin includes various gameplay modes, including lottery competitions that reward players with crypto and cash, traditional slot machine-style games, and live dealer games. In addition to providing crypto and cash rewards, Metawin also rewards players with blue-chip NFTs, as well as its own NFTs, known as Metawinner NFTs. These utility-focused NFTs permit players to access exclusive games and earn unique rewards.
DEXs are fantastic ways to trade without needing to trust a custodial exchange. However, due to liquidity issues, prices can vary significantly across different decentralized exchanges, and that’s where 1inch comes in. 1inch is a DEX aggregator that queries multiple DEXs for the lowest prices and automatically routes users’ trades to the exchange with the lowest prices. 1inch taps into over 75 liquidity sources across the Ethereum, BNB Smart Chain, and Polygon blockchains, including major DEXs like Uniswap, Balancer, and the 0X ecosystem.
1inch is governed by its native 1INCH token, launched in December 2020.
Lens Protocol is a powerful blockchain-based “social graph” platform hosted on Polygon. Lens hopes to revolutionize how social media works by allowing creators to maintain control over their communities/followers and the content they create, as well as allowing developers to create new, decentralized social platforms utilizing Lens Protocol’s open-source infrastructure. The protocol allows users to monetize their content and transfer their data to different social networks using a DAO account.
When users create an account/profile, they automatically generate a dynamic NFT that stores all the users’ content, likes, comments, and reposts.
To track how many (and which) followers a user has, other users are given a “follow NFT” when they follow a profile. In addition, through the use of a “follow module,” users can actually charge other users if they want to follow them, allowing for the creation of gated content. This can be structured as a one-time fee or as a subscription-based model.
Despite the ups and downs of the crypto market, dApps are growing faster than ever. From more traditional decentralized exchanges to decentralized NFT marketplaces and social media platforms, decentralized applications are building up steam throughout the crypto community. This is partially due to increasing mistrust in centralized crypto applications, as centralized exchanges and centralized borrowing and lending platforms have burned many investors in recent years.
Despite their increasing popularity, dApps still have a long way to go, and, often due to the complexity of setting up wallets and UX/UI issues, dApps are far from gaining mainstream acceptance. However, as long as these issues are addressed, dApps will likely continue to grow in popularity and, eventually, could begin to supplant centralized Web2 applications in various important contexts.
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