<s>
A	O
decentralised	O
application	B-Application
(	O
DApp	B-Application
,	O
dApp	B-Application
,	O
Dapp	B-Application
,	O
or	O
dapp	B-Application
)	O
is	O
an	O
application	B-Application
that	O
can	O
operate	O
autonomously	O
,	O
typically	O
through	O
the	O
use	O
of	O
smart	B-Application
contracts	I-Application
,	O
that	O
run	O
on	O
a	O
decentralized	B-Operating_System
computing	I-Operating_System
,	O
blockchain	B-Application
or	O
other	O
distributed	O
ledger	O
system	O
.	O
</s>
<s>
Like	O
traditional	O
applications	O
,	O
DApps	B-Application
provide	O
some	O
function	O
or	O
utility	O
to	O
its	O
users	O
.	O
</s>
<s>
However	O
,	O
unlike	O
traditional	O
applications	O
,	O
DApps	B-Application
operate	O
without	O
human	O
intervention	O
and	O
are	O
not	O
owned	O
by	O
any	O
one	O
entity	O
,	O
rather	O
DApps	B-Application
distribute	O
tokens	O
that	O
represent	O
ownership	O
.	O
</s>
<s>
These	O
tokens	O
are	O
distributed	O
according	O
to	O
a	O
programmed	O
algorithm	O
to	O
the	O
users	O
of	O
the	O
system	O
,	O
diluting	O
ownership	O
and	O
control	O
of	O
the	O
DApp	B-Application
.	O
</s>
<s>
Without	O
any	O
one	O
entity	O
controlling	O
the	O
system	O
,	O
the	O
application	B-Application
is	O
therefore	O
decentralised	O
.	O
</s>
<s>
Decentralised	O
applications	O
have	O
been	O
popularised	O
by	O
distributed	O
ledger	O
technologies	O
(	O
DLT	O
)	O
,	O
such	O
as	O
the	O
Ethereum	B-Application
or	O
Cardano	B-Protocol
blockchain	B-Application
,	O
on	O
which	O
DApps	B-Application
are	O
built	O
,	O
amongst	O
other	O
public	O
blockchains	B-Application
.	O
</s>
<s>
The	O
trustless	O
and	O
transparent	O
nature	O
of	O
DApps	B-Application
have	O
led	O
to	O
greater	O
developments	O
in	O
the	O
utilisation	O
of	O
these	O
features	O
within	O
the	O
decentralized	B-Protocol
finance	I-Protocol
(	O
DeFi	B-Protocol
)	O
space	O
.	O
</s>
<s>
DApps	B-Application
are	O
divided	O
into	O
numerous	O
categories	O
:	O
exchanges	O
,	O
games	O
,	O
finance	O
,	O
gambling	O
,	O
development	O
,	O
storage	O
,	O
high-risk	O
,	O
wallet	B-Protocol
,	O
governance	O
,	O
property	O
,	O
identity	B-Protocol
,	O
media	O
,	O
social	O
,	O
security	O
,	O
energy	O
,	O
insurance	O
,	O
health	O
,	O
etc	O
.	O
</s>
<s>
There	O
are	O
a	O
series	O
of	O
criteria	O
that	O
must	O
be	O
met	O
in	O
order	O
for	O
an	O
application	B-Application
to	O
be	O
considered	O
a	O
DApp	B-Application
.	O
</s>
<s>
Traditional	O
definitions	O
of	O
a	O
decentralised	O
application	B-Application
require	O
a	O
DApp	B-Application
to	O
be	O
open-source	B-License
.	O
</s>
<s>
That	O
is	O
,	O
the	O
application	B-Application
operates	O
autonomously	O
without	O
a	O
centralised	O
entity	O
in	O
control	O
of	O
the	O
majority	O
of	O
the	O
application	B-Application
’s	O
associated	O
tokens	O
.	O
</s>
<s>
DApps	B-Application
also	O
have	O
a	O
public	O
,	O
decentralised	O
blockchain	B-Application
that	O
is	O
used	O
by	O
the	O
application	B-Application
to	O
keep	O
a	O
cryptographic	O
record	O
of	O
data	O
,	O
including	O
historical	O
transactions	O
.	O
</s>
<s>
Although	O
traditional	O
DApps	B-Application
are	O
typically	O
open-source	B-License
,	O
DApps	B-Application
that	O
are	O
fully	O
closed-source	O
and	O
partially	O
closed-source	O
have	O
emerged	O
as	O
the	O
cryptocurrency	O
industry	O
evolves	O
.	O
</s>
<s>
As	O
of	O
2019	O
,	O
only	O
15.7	O
%	O
of	O
DApps	B-Application
are	O
fully	O
open-source	B-License
while	O
25%	O
of	O
DApps	B-Application
are	O
closed	O
source	O
.	O
</s>
<s>
In	O
other	O
words	O
,	O
the	O
proportion	O
of	O
DApps	B-Application
with	O
publicly	O
available	O
code	O
is	O
less	O
than	O
the	O
proportion	O
of	O
Dapps	B-Application
without	O
publicly	O
available	O
code	O
.	O
</s>
<s>
DApps	B-Application
that	O
are	O
open-source	B-License
generally	O
have	O
higher	O
transaction	O
volumes	O
than	O
closed-source	O
DApps	B-Application
.	O
</s>
<s>
Secondly	O
,	O
tokens	O
,	O
required	O
for	O
application	B-Application
use	O
and	O
user	O
rewards	O
must	O
be	O
generated	O
by	O
the	O
application	B-Application
as	O
per	O
a	O
programmed	O
algorithm	O
or	O
criteria	O
.	O
</s>
<s>
A	O
portion	O
of	O
the	O
application	B-Application
’s	O
tokens	O
is	O
typically	O
distributed	O
at	O
the	O
beginning	O
of	O
the	O
application	B-Application
’s	O
operation	O
.	O
</s>
<s>
Lastly	O
,	O
the	O
protocols	O
of	O
the	O
application	B-Application
must	O
be	O
able	O
to	O
adapt	O
in	O
favor	O
of	O
majority	O
consensus	O
by	O
the	O
application	B-Application
’s	O
users	O
,	O
such	O
to	O
make	O
improvements	O
to	O
the	O
application	B-Application
based	O
on	O
market	O
feedback	O
.	O
</s>
<s>
Bitcoin	O
,	O
the	O
first	O
cryptocurrency	O
,	O
is	O
an	O
example	O
of	O
a	O
DApp	B-Application
.	O
</s>
<s>
Bitcoin	O
is	O
open-source	B-License
.	O
</s>
<s>
All	O
transactions	O
on	O
the	O
Bitcoin	O
blockchain	B-Application
are	O
open	O
,	O
public	O
,	O
immutable	O
,	O
and	O
operates	O
without	O
the	O
control	O
of	O
any	O
centralized	O
entity	O
.	O
</s>
<s>
DApps	B-Application
can	O
be	O
classified	O
based	O
on	O
whether	O
they	O
operate	O
on	O
their	O
own	O
block	B-Application
chain	I-Application
,	O
or	O
whether	O
they	O
operate	O
on	O
the	O
block	B-Application
chain	I-Application
of	O
another	O
DApp	B-Application
.	O
</s>
<s>
By	O
this	O
classification	O
,	O
DApps	B-Application
are	O
divided	O
into	O
three	O
types	O
.	O
</s>
<s>
Type	O
I	O
DApps	B-Application
operate	O
on	O
their	O
own	O
block	B-Application
chain	I-Application
.	O
</s>
<s>
Block	B-Application
chains	I-Application
such	O
as	O
Bitcoin	O
and	O
Ethereum	B-Application
can	O
be	O
classified	O
as	O
Type	O
I	O
DApps	B-Application
.	O
</s>
<s>
Type	O
II	O
DApps	B-Application
are	O
protocols	O
that	O
operate	O
on	O
the	O
block	B-Application
chain	I-Application
of	O
a	O
Type	O
I	O
DApp	B-Application
.	O
</s>
<s>
Type	O
III	O
DApps	B-Application
are	O
protocols	O
that	O
operate	O
using	O
the	O
protocols	O
of	O
a	O
Type	O
II	O
DApp	B-Application
.	O
</s>
<s>
Similar	O
to	O
Type	O
II	O
DApps	B-Application
,	O
Type	O
III	O
DApps	B-Application
also	O
have	O
tokens	O
that	O
are	O
required	O
for	O
their	O
function	O
.	O
</s>
<s>
Smart	B-Application
contracts	I-Application
are	O
used	O
by	O
developers	O
to	O
maintain	O
data	O
on	O
the	O
block	B-Application
chain	I-Application
and	O
to	O
execute	O
operations	O
.	O
</s>
<s>
Multiple	O
smart	B-Application
contracts	I-Application
can	O
be	O
developed	O
for	O
a	O
single	O
DApp	B-Application
to	O
handle	O
more	O
complex	O
operations	O
.	O
</s>
<s>
Over	O
75%	O
of	O
DApps	B-Application
are	O
supported	O
by	O
a	O
single	O
smart	B-Application
contract	I-Application
,	O
with	O
the	O
remainder	O
using	O
multiple	O
smart	B-Application
contracts	I-Application
.	O
</s>
<s>
DApps	B-Application
incur	O
gas	O
,	O
that	O
is	O
fees	O
paid	O
to	O
the	O
validators	O
of	O
the	O
block	B-Application
chain	I-Application
,	O
due	O
to	O
the	O
cost	O
of	O
deploying	O
and	O
executing	O
the	O
DApp	B-Application
's	O
smart	B-Application
contracts	I-Application
.	O
</s>
<s>
The	O
amount	O
of	O
gas	O
required	O
of	O
a	O
DApp	B-Application
's	O
functions	O
is	O
dependent	O
on	O
the	O
complexity	O
of	O
its	O
smart	B-Application
contracts	I-Application
.	O
</s>
<s>
A	O
complex	O
smart	B-Application
contract	I-Application
of	O
a	O
DApp	B-Application
that	O
operates	O
on	O
the	O
Ethereum	B-Application
blockchain	B-Application
may	O
fail	O
to	O
be	O
deployed	O
if	O
it	O
costs	O
too	O
much	O
gas	O
,	O
leading	O
to	O
lower	O
throughput	O
and	O
longer	O
wait	O
times	O
for	O
execution	O
.	O
</s>
<s>
Consensus	O
mechanisms	O
are	O
used	O
by	O
DApps	B-Application
to	O
establish	O
consensus	O
on	O
the	O
network	O
.	O
</s>
<s>
The	O
two	O
most	O
common	O
mechanisms	O
to	O
establish	O
consensus	O
are	O
proof-of-work	O
(	O
POW	O
)	O
and	O
proof-of-stake	B-Protocol
(	O
POS	O
)	O
.	O
</s>
<s>
Proof-of-stake	B-Protocol
is	O
a	O
consensus	O
mechanism	O
that	O
supports	O
DApps	B-Application
through	O
validators	O
that	O
secure	O
the	O
network	O
by	O
having	O
a	O
stake	O
and	O
percent	O
ownership	O
over	O
the	O
application	B-Application
.	O
</s>
<s>
DApps	B-Application
distribute	O
their	O
tokens	O
through	O
three	O
main	O
mechanisms	O
:	O
mining	O
,	O
fund-raising	O
and	O
development	O
.	O
</s>
<s>
Tokens	O
can	O
also	O
be	O
distributed	O
through	O
fundraising	O
,	O
whereby	O
tokens	O
are	O
distributed	O
in	O
exchange	O
for	O
funding	O
in	O
the	O
initial	O
development	O
phase	O
of	O
the	O
DApp	B-Application
,	O
as	O
in	O
an	O
initial	B-Application
coin	I-Application
offering	I-Application
.	O
</s>
<s>
Lastly	O
,	O
the	O
development	O
mechanism	O
distributes	O
tokens	O
that	O
are	O
set	O
aside	O
for	O
the	O
purpose	O
of	O
developing	O
the	O
DApp	B-Application
through	O
a	O
pre-determined	O
schedule	O
.	O
</s>
<s>
There	O
are	O
three	O
main	O
steps	O
that	O
always	O
occur	O
in	O
the	O
formation	O
and	O
development	O
of	O
any	O
DApp	B-Application
:	O
the	O
publishing	O
of	O
the	O
DApp	B-Application
’s	O
whitepaper	O
,	O
the	O
distribution	O
of	O
initial	O
tokens	O
,	O
and	O
the	O
distribution	O
of	O
ownership	O
.	O
</s>
<s>
Firstly	O
,	O
the	O
whitepaper	O
is	O
published	O
,	O
describing	O
the	O
DApp	B-Application
’s	O
protocols	O
,	O
features	O
and	O
implementation	O
.	O
</s>
<s>
Lastly	O
,	O
as	O
greater	O
numbers	O
of	O
participants	O
join	O
the	O
network	O
,	O
either	O
through	O
utilisation	O
of	O
the	O
DApp	B-Application
or	O
through	O
contributions	O
to	O
the	O
DApp	B-Application
’s	O
development	O
,	O
token	O
ownership	O
dilutes	O
,	O
and	O
the	O
system	O
becomes	O
less	O
centralised	O
.	O
</s>
<s>
DApps	B-Application
have	O
their	O
backend	O
code	O
running	O
on	O
a	O
decentralized	O
peer-to-peer	O
network	O
,	O
as	O
opposed	O
to	O
typical	O
applications	O
where	O
the	O
backend	O
code	O
is	O
running	O
on	O
centralized	O
servers	O
.	O
</s>
<s>
A	O
DApp	B-Application
can	O
have	O
frontend	O
code	O
and	O
user	O
interfaces	O
written	O
in	O
any	O
language	O
that	O
can	O
make	O
calls	O
to	O
its	O
backend	O
.	O
</s>
<s>
DApps	B-Application
have	O
been	O
utilized	O
in	O
decentralized	B-Protocol
finance	I-Protocol
(	O
DeFi	B-Protocol
)	O
,	O
in	O
which	O
dapps	B-Application
perform	O
financial	O
functions	O
on	O
blockchains	B-Application
.	O
</s>
<s>
Decentralized	B-Protocol
finance	I-Protocol
validating	O
peer-to-peer	O
transactions	O
to	O
disrupt	O
centralized	O
finance	O
and	O
lower	O
the	O
cost	O
.	O
</s>
<s>
All	O
the	O
DApps	B-Application
have	O
an	O
identifying	O
code	O
that	O
may	O
only	O
work	O
on	O
a	O
specific	O
platform	O
.	O
</s>
<s>
Not	O
all	O
DApps	B-Application
work	O
on	O
standard	O
web	B-Application
browsers	I-Application
.	O
</s>
<s>
Some	O
of	O
them	O
only	O
work	O
on	O
special	O
websites	O
with	O
a	O
customized	O
code	O
,	O
adjusted	O
to	O
open	O
certain	O
DApps	B-Application
.	O
</s>
<s>
The	O
performance	O
of	O
a	O
DApp	B-Application
is	O
tied	O
to	O
its	O
latency	O
,	O
throughput	O
,	O
and	O
sequential	O
performance	O
.	O
</s>
<s>
Ethereum	B-Application
offers	O
a	O
reduced	O
latency	O
of	O
one	O
transaction	O
every	O
15	O
seconds	O
.	O
</s>
<s>
More	O
recent	O
DApp	B-Application
projects	O
,	O
such	O
as	O
Solana	B-Protocol
,	O
have	O
attempted	O
to	O
exceed	O
that	O
rate	O
.	O
</s>
<s>
Internet	O
connectivity	O
is	O
a	O
core	O
dependency	O
of	O
blockchain	B-Application
systems	O
,	O
which	O
includes	O
DApps	B-Application
.	O
</s>
<s>
This	O
is	O
an	O
issue	O
for	O
Ethereum	B-Application
,	O
which	O
is	O
attributed	O
to	O
increased	O
network	O
traffic	O
caused	O
by	O
DApps	B-Application
built	O
on	O
the	O
Ethereum	B-Application
blockchain	B-Application
,	O
such	O
as	O
those	O
used	O
by	O
Non-fungible	O
tokens	O
(	O
NFTs	O
)	O
.	O
</s>
<s>
Transaction	O
fees	O
are	O
affected	O
by	O
the	O
complexity	O
of	O
a	O
DApp	B-Application
's	O
smart	B-Application
contracts	I-Application
,	O
and	O
by	O
the	O
particular	O
blockchain	B-Application
.	O
</s>
<s>
Ethereum	B-Application
is	O
the	O
distributed	O
ledger	O
technology	O
(	O
DLT	O
)	O
that	O
has	O
the	O
largest	O
DApp	B-Application
market	O
.	O
</s>
<s>
The	O
first	O
DApp	B-Application
on	O
the	O
Ethereum	B-Application
blockchain	B-Application
was	O
published	O
on	O
April	O
22	O
,	O
2016	O
.	O
</s>
<s>
From	O
May	O
2017	O
,	O
the	O
number	O
of	O
DApps	B-Application
being	O
developed	O
have	O
grown	O
at	O
a	O
higher	O
rate	O
.	O
</s>
<s>
After	O
February	O
2018	O
,	O
DApps	B-Application
have	O
been	O
published	O
every	O
day	O
.	O
</s>
<s>
Less	O
than	O
one	O
fifth	O
of	O
DApps	B-Application
capture	O
almost	O
all	O
the	O
DApp	B-Application
users	O
on	O
the	O
Ethereum	B-Application
blockchain	B-Application
.	O
</s>
<s>
About	O
5%	O
of	O
DApps	B-Application
capture	O
80%	O
of	O
Ethereum	B-Application
transactions	O
.	O
</s>
<s>
80%	O
of	O
DApps	B-Application
on	O
Ethereum	B-Application
are	O
used	O
by	O
less	O
than	O
1000	O
users	O
.	O
</s>
<s>
On	O
Ethereum	B-Application
,	O
DApps	B-Application
that	O
are	O
exchanges	O
capture	O
61.5	O
%	O
of	O
transaction	O
volume	O
,	O
finance	O
DApps	B-Application
capture	O
25.6	O
%	O
,	O
gambling	O
DApps	B-Application
capture	O
5%	O
,	O
high-risk	O
DApps	B-Application
capture	O
4.1	O
%	O
,	O
and	O
games	O
capture	O
2.5	O
%	O
.	O
</s>
<s>
DApps	B-Application
have	O
not	O
achieved	O
wide	O
adoption	O
.	O
</s>
<s>
Potential	O
users	O
may	O
not	O
have	O
the	O
skill	O
or	O
knowledge	O
to	O
be	O
able	O
to	O
effectively	O
analyse	O
the	O
differences	O
between	O
DApps	B-Application
and	O
traditional	O
applications	O
,	O
and	O
also	O
may	O
not	O
value	O
those	O
differences	O
.	O
</s>
<s>
Additionally	O
,	O
the	O
user	O
experience	O
for	O
DApps	B-Application
is	O
often	O
poor	O
,	O
as	O
they	O
are	O
often	O
developed	O
to	O
prioritize	O
functionality	O
,	O
maintenance	O
and	O
stability	O
.	O
</s>
<s>
Many	O
DApps	B-Application
struggle	O
to	O
attract	O
users	O
,	O
particularly	O
in	O
their	O
founding	O
stages	O
,	O
and	O
even	O
those	O
that	O
attract	O
widespread	O
initial	O
popularity	O
struggle	O
to	O
retain	O
it	O
.	O
</s>
<s>
A	O
notable	O
example	O
was	O
the	O
DApp	B-Application
CryptoKitties	B-Protocol
,	O
which	O
heavily	O
slowed	O
down	O
the	O
Ethereum	B-Application
network	O
at	O
the	O
height	O
of	O
its	O
popularity	O
.	O
</s>
<s>
CryptoKitties	B-Protocol
and	O
another	O
similar	O
gaming-based	O
DApp	B-Application
Dice	O
Games	O
have	O
failed	O
to	O
attract	O
similar	O
traction	O
since	O
.	O
</s>
<s>
Augur	B-Protocol
prediction	O
market	O
platform	O
.	O
</s>
<s>
Cryptokitties	B-Protocol
game	O
built	O
on	O
Ethereum	B-Application
.	O
</s>
<s>
It	O
slowed	O
Ethereum	B-Application
down	O
due	O
to	O
insufficient	O
transaction	O
processing	O
and	O
exposed	O
the	O
scaling	O
limitations	O
of	O
public	O
blockchains	B-Application
.	O
</s>
<s>
Stacks	O
project	O
a	O
platform	O
for	O
developing	O
decentralized	B-Application
applications	I-Application
.	O
</s>
<s>
Freelance	O
platform	O
on	O
smart	B-Application
contract	I-Application
.	O
</s>
<s>
Uniswap	B-Protocol
a	O
decentralized	O
cryptocurrency	O
exchange	O
.	O
</s>
