Like all things blockchain and decentralization, the idea behind DApps is essentially to remove the middleman. Simple in theory, wildly innovative in practice. DApp stands for “decentralized application,” which, as you may expect, is an app that runs on a blockchain. Like cryptocurrency, the initial benefit is clear: it’s a new form of open-sourced tech that isn’t controlled by larger institutions/corporations/governments/etc. It’s the other game-changing possibilities of DApps, though, that crypto enthusiasts will want to pay attention to.
Advanced DeFi lending
At the forefront of innovation in the DeFi lending space is MakerDAO, a decentralized organization using the power of DApps. Essentially, MakerDAO has created a protocol allowing users to collateralize their ETH for loans of the stablecoin DAI. Reasonable borrowing is incentivized by the threat of immediate liquidation of that collateral ETH by the lender in the case that ETH drops too low below DAI.
In other words, the collateral coin will be automatically liquidated before it dips beneath the value of the original loan, removing some of the repayment risk associated with DeFi lending. The open-source nature of this protocol triggers a simple but critical chain of events that adds a significant amount of security to DeFi loans, potentially priming them for more widespread adoption.
A Totally New Way to Do Business
Also of interest to the financially minded are DApps like Augur, which seek to transform the way we conduct business without middlemen. Augur’s slice of this transformation exists as a betting marketplace without site administrators. A trustless, automated betting system that pays out directly without the interference of a middleman, the platform enables individual users to create “their own futures market,” according to Decrypt.co, “without Augur’s oversight.”
The implications of using DApps in this way to conduct business are significant, and point at a much more honest (trustless, if you will) future for the industry. Automation is one thing, but automation that is publicly recorded and unalterable is a whole different concept: one that can make business transactions infinitely more transparent.
The value of DApps comes down to their potential for widespread adoption. Even while cryptocurrency itself may still be on its way to mainstream adoption, with much of its culture and terminology still out of reach for the average Joe, apps are something everyone already uses every single day. With a format most people are used to, DApps are an incredible opportunity to help familiarize the public at large with blockchain, which could usher in an era of mass adoption in a way we never quite expected: through lending, gambling, and even video games.