Decentralized applications (dApps) are a relatively new technology that’s become increasingly popular in investment circles. dApps offer the look and functionality of the standard web and phone applications we’re all familiar with, but dApps aren’t run off corporate servers.
Instead, dApps run on a blockchain or peer-to-peer network. That way, no single user or company has control over them. They are community-driven.
Another advantage of decentralized applications is that downtime is eliminated. If a server goes down, another PC takes up the load and dApps continue working. With no central authority responsible for running dApps, they are resistant to interference by governments, corporations or individuals.
Here are the 4 top dApps that could dominate the decentralized applications future:
- Uniswap (CCC:UNI-USD)
- IDEX (CCC:IDEX-USD)
- MakerDAO (CCC:MKR-USD, CCC:DAI-USD)
dApps are typically open-source, so developers are able to improve features and functionality more quickly. And because dApps are typically blockchain-based, its easy to deeply integrate cryptocurrencies. Interested in exploring dApps? Here are four popular decentralized applications for the new investing world.
U.S.-based Uniswap launched in 2018. The key function of Uniswap is the exchange of Ethereum (CCC:ETH-USD) and other ERC-20 digital currency tokens. Uniswap also offers a Pool feature. Users deposit tokens into a smart contract — providing liquidity — and earn pool tokens in return.
Uniswap is popular for a number of reasons, including low trading fees, a self-custodial approach (users retain full custody of their funds) and a wide range of tokens available for trading.
Users also appreciate the fact it does not require a Know Your Customer (KYC) process. This not only means they can get set up and trading more quickly, it also offers protection for personal information should the exchange ever be hacked.
Uniswap claims over 43 million lifetime trades, with over $223 billion in volume.
IDEX bills itself as the world’s most advanced cryptocurrency exchange. Launched in 2016, IDEX is currently available for Ethereum and Binance (CCC:BNB-USD) blockchains. This dApp was the first Ethereum-based smart contract exchange to allow real-time trading.
With IDEX, traders don’t have to wait for transactions to mine, they can place multiple orders and they can cancel orders without having to pay a gas cost (which many other exchanges charge to speed up the transaction).
Security is a big selling point, with users required to verify all trades using a private key. IDEX also has its own token, designed to allow investors to earn a share of fees generated by the exchange.
MakerDAO (MKR-USD, DAI-USD)
MakerDAO is a crypto-lending platform with its own digital currency called Dai. It allows users to borrow and lend using a decentralized application, with no middleman taking part of the proceeds. Like Uniswap, users are not required to register or KYC.
One of the reasons investors like MakerDAO is that Dai is a stablecoin currency. That means its value is kept pegged to the U.S. dollar for stability. That’s a win in a crypto world where the value of currencies such as Bitcoin (CCC:BTC-USD) can fluctuate wildly. Additionally, Dai is not tied to any specific countries, so no governments or banks have any control over spending, lending or borrowing on the platform.
By December 2020, the number of Dai tokens in existence topped 1 billion. At the same time, the total value of assets secured on MakerDao hit $2.71 billion, a 674% year-over-year increase.
Those interested in investing in NFTs (Non Fungible Tokens) know all about CryptoPunks. A revolutionary among decentralized applications, CryptoPunks has been trading NFTs since 2017. In fact, this dApp claims to have generated the first NFT.
Each of the 10,000 CryptoPunks NFTs is an 8-bit, 24 x 24 pixel art image. On March 11, one of these NFTS — CryptoPunk7804 — sold for 4,200 Ethereum, the equivalent of $7.5 million.
The Ethereum blockchain-based platform has seen nearly $275 million in transaction volume in that time.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
Brad Moon has been writing for InvestorPlace.com since 2012. He also writes about stocks for Kiplinger and has been a senior contributor focusing on consumer technology for Forbes since 2015.