DAPPs and WEB3 wallets: Decentralized Applications — what is it and how to access them?
This blog-post aims to explain what decentralized applications are and provide the reader with a better understanding of why dapps are developed and how you can access them.
Dapp [Decentralized application]: An application that uses decentralized protocols for some or all aspects of its operation. Crucial parts of the program logic within the back-end are required to be executed on a decentralized peer-to-peer network (the blockchain) to be considered a dapp. Dapps are powered by smart contracts, a program, which is stored and run on a (permissionless) blockchain network executing the core logic of the dapp.
In some extreme cases, developers use decentralized storage systems like IPFS to host the frontend and other files, minimizing counterparty risks and resulting in a higher degree of resilience against third party interference.
Dapp = centralized front-end + decentralized back-end (smart contracts)
However, in the wild, it often happens that applications are labeled as dapp while not satisfying the requirements. Products are frequently labeled as decentralized, but can’t uphold its principles eg. by blocking certain regions from accessing the front-end. Whether a program can uphold the characteristics and properties of a dapp can only be assessed with a case-by-case evaluation by IT-experts with insight into the business processes of the respective application. While the crypto-community constantly debates if an application qualifies as decentralized or not it is extremely difficult to draw the line on this spectrum of (de-)centralization, which is influenced by a multitude of factors.
Three competitive advantages
In the following we will take a closer look into the characteristics, which make dapps attractive for business activities and our society as a whole:
Programmable business logic
While bitcoin is mainly focused on the use-case of a peer-to-peer cash (aka. digital money) other platforms enable the execution of potential unlimited use-cases, since these platforms are designed to solve any reasonable computational problem. The elephant in the room here is Ethereum, which offers a Turing complete virtual machine. As a simplification, you could imagine a “world-computer”, which can be accessed by anyone and strictly follows the rules embedded in the protocol. Everybody who got the knowledge can translate business logic into code and the Ethereum network will execute it. The program code is stored directly within the blockchain and is then referred to as smart-contract. While not legally binding like a normal contract, these programs can be used by everyone leading to an open network of different applications built on top of each other. Hence, Dapps can leverage existing infrastructures and business logic within an execution platform with “fixed” rules. This enables an extreme level of innovation fueled by business- and process automation.
Direct ownership: Self-custody
One of the key aspects fueling the rise of decentralized networks is the aspect of ownership. Traditional financial assets like bonds, stocks, derivatives, etc. are held by third parties, which offer access to the financial service. Bitcoin introduced the concept of self-custody by owning and possessing the private key of the respective coins. Self-custody wallets enable users to hold and manage assets without the risk of being confiscated or blocked by a third party or a government. People increasingly feel the necessity to control the custody of their property. Dictatorships, the financial- or more precisely the fractional reserve system — and general violations of human rights forces individuals to search for new solutions of property management. The most used standard to represent a digital ownership is the ERC721 standard, which is also called NFT: Non-Fungible Token. Basically, a unique token, which can’t be copied and is attached to a certain asset like an artwork, an in-game item like a skin or an invoice.
Decentralization & censorship-resistance
Permissionless blockchains enable the execution of business logic without interference from third parties like powerful corporations or governments. Bitcoin & Ethereum are the best examples of a censorship-resistant platform. Over time smart entrepreneurs and coders have built useful financial services with engaging user-interfaces (UI) on the Ethereum network. This enables dapps to function without complying with cumbersome regulations such as KYC, AML, CTF, GDPR and also liberate developers from illicit business practices of apple and google, which have a huge control of the market for mobile applications. This not only streamlines the user-experience (UX), but also allows these types of applications to reduce operating and compliance costs. Taking a small portion of the transaction as revenue, costs reductions can be forwarded to the end-consumer. However, the degree of censorship-resistance and third-party interference varies from platform to platform and is highly dependent on the used consensus mechanism such as POW, POS, DPOS, BFT, etc.
Smart contract platforms:
Besides of ethereum, there are quite a few other networks enabling dapps, namely: EOS, Tron, Steem, Block Stack, OST, Steem, Waves, Neo and cosmos among others. However, none of these platforms can compete with the status-quo of ethereum in regards to the combination of available dapps, documentation, user-base, general adoption and degree of censorship-resistance. If you want to know more about Ethereum check out Ethhub.io.
Since dapp implementations, as well as the networks executing the code, can vary greatly in regards to the censorship-resistance and degree of decentralization the classification of existing solutions is an ongoing debate. New technology, which enables programmable value transfer effectively circumventing government interference is also subject to a lot of environmental forces for obvious reasons.
Ethereum: Use cases & implementations
We can observe developments in different areas such as finance, gaming, marketplaces etc. Here a collection of dapps I deemed worth checking out:
Financial Services: Staking, borrowing, lending, etc. summarized as decentralized finance (#DeFi): Compount, makerDAO, Zerion, Set Protocol, InstaDapp, DefiSaver,
DEX (decentralized exchange): Airswap, Kyber, Joyso, IDEX, 0xPortal,
Gaming: GodsUnchained, Etheremon, Axie Infinity, Ox Universe, Cryptokitties, decentraland, MyCryptoHeroes, Exo Planets,
Collecting: Superrare (Art), KnownOrigin (Art), Stryking (sport), Mintable- mint own tokens, Crypto Goods Gallery
Marketplaces: Open bazaar, Opskins, Origin, Open Sea (NFT Trading), Name Bazaar, RareBits, Ethereum name system (ENS)
Social: Bounties Network, Cent, Bounty0X, Gitcoin, Peepeth, Indorse, Aragon, 3Box, Dlive (streaming), Steemit, Pepo, Minds, Ethlance(work)
For more information about dapp ecosystem feel free to check out these great resources:
The “crypto war”
There are quite some people who believe only one network or coin is the true one and all the others are scams. Community hotspots like Telegram, Twitter, Discord, and members of highly specialized forums sometimes share the same mindset, but more often big debates about the fundamentals erupt.
But there is a shared vision of many, which drive prosperous communities with deeply ethical motivations shaping the death struggle of privacy. While not the main reason for these debates, privacy is already non-existent for the vast majority of internet users. But a basic human need can’t be eliminated. We will see how surveillance capitalism downgrades privacy and humanity.
But here we leave the crypto wars and the privacy topic beside and just focus on how you can access this new ecosystem with a focus on decentralized applications on the ethereum network. However, a lot of these wallets also offer the option to access other networks.
WEB3 Wallets & Dapp browsers for ethereum
DEF: WEB3 wallet: A self-custody wallet enabling access to the 3rd generation of the web including the usage of dapps. Web3 wallet is really just a browser added to the regular self-custody wallet enabling the usage of dapps.
In most of these WEB3 wallets you will find a section dedicated to access dapps via a dapp browser. It will illustrate the available applications categorized like I did above.
Should you struggle to understand the terms “self-custody wallet”, “Hardware-Wallet” or “smart contract-wallet”, please take a look at my blog-post explaining the different kinds of wallets in more detail.
Please do your own research and evaluate the trustworthiness of a wallet provider before using it. Also make yourself familiar with the best practices of using cryptocurrencies as well as their backup.
Note: UX = User experience, UI = User interface
Metamask: Developed by consensys, best track record, great UX & features,
Trust: Acquired by binance, great UX & features
ImToken: great UX & features, belongs to Hangzhou Rongshi Technology Co., Ltd.
Coinbase: great UX & features, formally known as toshi browser, acquired by the coinbase exchange in 2018.
Status: open source messenger application with dapp browser, raised 102 Million USD via its ICO by issuing the SNT token, great UI.
Enjin: great UX & features, Samsung partner, Singapore based, developed by Enjin Pte Ltd.
Alpha: Nice add function of dapps, Good UX, ownership structure not clear.
Opera: Available for desktop and mobile, great UX, majority stake owned by Chinese consortium “Golden Brick Capital Private Equity Fund”.
DEX wallet: Not tested, only available on iOS, developed by daxlab.io. Infinito: developed by Infinito Solutions Pte Ltd. with its head office in Singapore, mediocre UX.
Huobi: developed by the Huobi Group, which is well known for its exchange with the same name. The company was founded in China and currently has its headquarter in Singapore. Great UI
Cipher: great UX & features, obscure ownership structure
Ledger: While not supporting dapps directly, you can use e.g. the Ledger Nano S to access Compound and other dapps as Chris Blanc explains. Ledger SAS is headquartered in Paris and has the best track record of all hardware wallet providers.
Trezor: Trezor can be used in combination with Metamask to access dapps. Trezor is developed by satoshilabs in the Czech Republic and is well known for its BIP contributions.
HTC EXODUS with the Zion Vault: Smartphone as hardware wallet with dapp support. Developed and manufactured in Taiwan by the HTC Corporation.
Smart contract wallets: (mobile application)
Gnosis Safe: Dapp access via wallet connect, Gnosis Ltd is registered in Gibraltar and mainly operates from Berlin.
Argent: Currently only support for compound, Argent Labs Limited is registered in England and Wales.
Dapper: Browser extension, uses google location services, confusing UX, developed by dapperlabs, which has a great track record by developing Cryptokitties.
Portis: SDK (software development kit) solution with WEB2 login experience, cookies required, based in Tel Aviv, ownership structure unclear.
Mist: Official programming implementation of the language Geth for a full node wallet, which makes it a fundamental pillar of the ecosystem by offering more sophisticated functionalities. It’s not necessarily beginner-friendly, but worth a lock.
Fortmatic: Your phone or email will be used to sign-up and login. Developed by Fortmatic Inc. in San Francisco.
MyCrypto: The team behind the MEW co-founder Taylor Monahan built an awesome open-source, client-side tool for generating ether wallets, handling ERC-20 tokens, and interacting with the blockchain more easily. MyCrypto, Inc. in California, USA.
MEW Connect: MyEtherWallet is an web-based access tool. With the MEW Connect app you can access dapps too. MEW is open source and developed by MyEtherWallet Inc. in the USA.
Please note that there are more than the listed WEB3 wallets, however the above mentioned are the most prominent in the space.
As the image above illustrates a dapp (like known origin) can be accessed with multiple WEB3 wallet implementations. Should you already have a mobile WEB3 wallet, the easiest way to access a dapp is via Wallet Connect.
WalletConnect & Web3 connect are open protocols for connecting desktop dapps to mobile wallets using end-to-end encryption by scanning a QR code. This means you can use e.g. your Trust wallet to access a dapp on your desktop computer without any further extension or program.
Have fun experiencing the decentralized web & use a hardware wallet when you increase your investments!
Own your keys
About the author:
Adrian is trained technician and currently finishes his international business studies in Germany. He already worked as blockchain adviser for financial institutions as well as for the self-custody wallet provider HTC EXODUS. Hodl Helper is student side hustle and has no sponsors or similar. Feel free to support his independent content creation by donating to hodlhelper.eth