In the cryptocurrency world, outside of bitcoin, you will find a range of altcoins striving to tackle new areas where blockchains can make an impact, with some even attempting to improve on bitcoin’s design. While the projects hoping to replace bitcoin ultimately appear as spurious propositions, the advent of smart contracts has broached the conversation about the potential of decentralized applications (dapps).
At a high level, dapps are user-facing applications that operate on a blockchain, wielding the underlying benefits of the public, distributed networks like censorship-resistance, scarcity, data ownership, and the removal of rent-seeking third-parties.
However, despite the fever pitch surrounding dapps at the height of the ICO mania in 2017 and 2018, they fell out of favor with users — largely because of poor user-experiences drawing from the complexity of the underlying technology.
And it’s no secret that dapps have a usability problem.
But the problems facing dapps have not stopped developers from working on advancing what many dapp proponents view as the inevitable next-generation of consumer applications. In part, this narrative has been primarily fueled by the interest surrounding open, decentralized finance, colloquially referred to as “DeFi” in cryptocurrency circles.
Couple a promising new market for dapps with the resurrection of the bitcoin bull market, and public intrigue in dapps may balloon over the next several years. One startup at the forefront of this technological revolution is Dapp.com, an analytics-driven dapp store pushing users to discover, use, and analyze dapps. I had a chance to speak with Dapp.com Founder and CEO, Kyle Lu, on the direction of the dapp sector and all of the fascinating components surrounding it.
Joresa Blount: Can you explain what you assess as the primary use cases for dapps?
Kyle Lu: The principal use cases for dapps are to create trustless environments, provide censorship-resistance, lower barriers to access services, and create an open market that produces liquidity for digital assets.
So far, we’ve seen a lot of gambling and high-risks dapps that are powered by smart contracts in order to provide transparency on their mechanics. Meanwhile, the liquidity provided by blockchains has furnished the opportunities of tokens (i.e., specifically NFTs) flow freely across different products and platforms.
For example, the possibilities around collaborative game development are compelling and can help users to extract value directly from games — even becoming contributors to the games.
Joresa: Dapps, specifically on Ethereum, have a usability problem. Can you refine some of the major hurdles facing onboarding more mainstream users and your initiatives to reduce those barriers to entry?
Kyle: I think that Fluence’s report earlier this year really hammered home some of the significant points of friction facing the onboarding of more dapp users. For example, when we say the UI/UX is lacking, it means there are delays in dapp actions (i.e., interfaces aren’t smooth), gas/transaction costs on Ethereum confuses most users, and there are scalability limitations at the moment that preclude many types of dapps from being realized.
However, with any innovative technology, there is always a gap between the technical side and user side that is eventually bridged with further understanding and development. That’s happening right now in crypto, and we think that our initiative, not just the analytics and market reports, but our standardized resources for developers (e.g., DAPPT) that we’re working on can really help drive that narrative.
It’s all about creating a frictionless experience for the end-user. Today, the most popular applications are slick and user-friendly, and that’s the goal for dapps.
Joresa: 2018 saw the emergence of more advanced analytics and metrics for on-chain transactions, dapp usage, and more. How do you view the metrics provided by Dapp.com as evolving as we progress towards more scalable and interoperable public blockchains?
Kyle: We currently offer in-depth metrics and analytics for 6 different blockchains, including Ethereum, EOS, TRON, TomoChain, Steem, and IOST — representing the largest curation of dapp metrics in the market.
We plan on expanding to more platforms as they emerge, like Cosmos and Polkadot, and we’ve received positive feedback our quarterly reports outlining both the finer and broader aspects of the dapp sector. Beyond metrics, we plan on providing more comprehensive resources for developers and users to build and access dapps, respectively.
Interoperable blockchains should provide the common thread between dapps that will improve the user experience, and scalability on the back-end, even further.
Joresa: Despite the rising narrative of DeFi applications (e.g., credit instruments like MakerDAO) on Ethereum, many of the most popular dapps continue to be games and gambling. What do you think will be the inflection point that will cause a surge in interest by mainstream users in more practical financial dapps?
Kyle: Games and gambling are interestingly some of the first applications to emerge out of innovative technology, just look at some of the simple gaming and online gambling apps of the early Internet. Add in incentive systems for dapp development, like TRON Arcade, and developers are rewarded for focusing on niche markets.
Don’t forget that many early crypto users are gamers too. Along with the transparency factor of gambling dapps, where users can verify they are not being cheated by checking the code, and it’s not surprising that we’re where we are at now. However, I do think that DeFi is changing that notion rapidly.
For example, finance dapps on TomoChain, a smart contracts platform that we provide metrics for, accounted for more than 60 percent of the users and 70 percent of the transactions throughout Q2. Similarly, there are hundreds of DeFi projects building on Ethereum, and it is only a matter of time before interest by the public in open credit instruments and other financial products on blockchains blossoms. Imagine markets for SMEs and unbanked to access capital and financial products unavailable to them in the legacy financial world.
With the right educational resources, analytics, and tools for tapping into blockchains, this can quickly become a reality.
Joresa: Ethereum is gearing up to roll out its Ethereum 2.0 version, and the industry is rife with rising platforms at the convergence of scalability and interoperability like Cosmos, Polkadot, and Tezos. How do you think the competition between these platforms will play out over the next 5 years, and what is your long-term projection?
Kyle: I believe that within 5 years, all of the conventional apps people use on a daily basis will have elements of decentralization. For the users, they won’t notice these as they exist on the back-end, which has been one of the primary points of friction so far in building more user-friendly applications — abstracting away the blockchain component.
In the long run, I anticipate many cross-chain tools and unified wallets for different blockchains will be widely used, and numerous tools will be built by blockchain communities to facilitate development in a short period of time.
Concerning the competition among blockchain platforms for users, blockchains in their own niche markets will survive, and hopefully, for developers, choosing a blockchain will be akin to choosing between AWS and Google Cloud for their data storage requirements. I don’t think they have to necessarily be mutually exclusive, and the optimal market is one saturated with options for users based on their preferences.