Top 3 Use cases in Decentralized Applications — The DNA of Web 3.0

Top 3 Use cases in Decentralized Applications — The DNA of Web 3.0
September 19, 2022

Decentralized Applications development is potentially the most important technical advance brought to the digital space by the invention of a blockchain. All decentralized Dapps use blockchain nodes — let's cut through the system's incredible diversity.

What is meant by a Decentralized finance application?

Decentralized Dapp is a class of software programs that need smart contracts to operate. They have also been called ‘on-chain’ applications as they utilize blockchains as back-end.

Decentralized applications process data via blockchains so they don’t depend on centralized servers, crypto wallets, or key storage. The architecture design of a DeFi application can’t be controlled or censored by its team or third party.

Decentralized finance applications can be deployed to blockchains that help smart contracts: Ethereum, BSC, Polygon, and so on.

What's driving the adoption of DApps?

Decentralized Dapps are cost-efficient and censorship-resistant. Technically, the gas fees of the underlying blockchain system are the only operational costs associated with the activity of Applications.

Decentralized Dapps are ‘fair’ by design: no team member can corrupt the outcome of an on-chain referendum or tournament. DApps are ideal for any application that requires verified randomness.

Finally, DeFi applications has started to accept digital currencies as their payment methods. Likewise, every decentralized Application has its own independent tokenomics that notably lowers operational and legal barriers for such businesses.

DApps: The Top categories 

By 2022, there are various categories of DeFi applications that run for fun and profit. In the Decentralized Apps world, people can gain passive earnings, entertain themselves, collect and trade NFTs, and so on.

Decentralized finance (DeFi) protocols 

Decentralized finance protocols, also known as DeFi, are the most common types of dApps today. There are 2749 DeFi protocols across all smart contract platforms, according to data from the Dappradar analytical platform.

DeFi can be better understood as decentralized banks as they provide their clients with exposure to a full set of basic financial operations. DeFi clients can lend or borrow money against collateral, swap various crypto assets, issue stablecoins, and so on, just like traditional banks. At the same time, some procedures, such as 'yield farming,' are only possible in DeFi. In order to receive periodic payments, 'yield farmers' lock their liquidity in favour of this or that protocol. It functions similarly to bank deposits, but with much higher annual percentage yields.

Ethereum-based Uniswap (UNI) and BSC-based PancakeSwap (CAKE) are the two most popular DeFi protocols.

The Decentralized games (Play-to-Earn, GameFi)

MMORPGs with built-in features of ownership achieved through non-fungible tokens or native cryptocurrencies should be referred to as Play-to-Earn or GameFi protocols. GameFi also act like internet games with DeFi design aspects built-in. Besides entertainment, Play-to-Earn activity can be a profitable business, in particular — for crypto enthusiasts from emerging economies.

Play-to-Earn games are intricately linked to Metaverses, another popular topic in the crypto world. The three most well-known blockchain-based games are Decentraland, Axie Infinity, and The Sandbox.

Decentralized stores: NFTs marketplaces

Non-fungible tokens are a tokenized form of content ownership, such as images, videos, photos, and books. When a crypto token is purchased by this or that account, the new owner assumes control of the content's IP rights. The NFT craze democratized digital art markets and resulted in a massive infusion of funds into NFT trading. As a result, top-tier DApps like Mintable, Opensea, Rarible, and others have emerged.

Bottom line

The on-chain software programs that use smart contracts as a technical basis for their transactions are known as Dapps. Due to the high level of censorship resistance and inclusive participation, decentralized applications are becoming increasingly popular.

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