A new wave of decentralized applications (dapps) is set to emerge in the developing blockchain 3.0 era as the industry moves forward into scalability and interoperability solutions. Complex projects such as Augur have recently launched, gaming applications and platforms are everywhere, and decentralized marketplaces are growing in popularity.
While the industry and appeal of dapps show promise, analyzing their overall usage at this stage reveal that they need to make some significant progress to garner widespread adoption.
The primary issue facing mainstream adoption of dapps right now is not a lack of creativity or availability of options, but rather underlying technologies that are still in development. Utilizing the blockchain and its associated decentralized technologies is complicated and requires tinkering with unique platforms and complex smart contract designs.
DappRadar, the popular tool for evaluating Ethereum dapp daily active users and volumes of ETH, ranks popular dapps on Ethereum from gaming to decentralized marketplaces. However, the numbers are underwhelming, with IDEX — the popular decentralized exchange — leading the way with approximately 2,000 daily users and 4,600 ETH exchanged in the last 24 hours.
Well-known non-fungible trading game CryptoKitties had only 346 active users, and 33 ETH exchanged over the last 24 hours, at the time of this writing. Even complex prediction market Augur’s volume has been decreasing slowly since its launch, with slightly more than only 2,000 ETH and 1,000 transactions over the last 7 days.
Compared to popular traditional and centralized applications available through Apple and Google that see hundreds of thousands and sometimes millions of daily active users, it is clear that dapp usage is severely lacking. While the metrics for usage of dapps at the moment may seem like a major red flag, there are a variety of legitimate reasons and established hurdles that need to be overcome and are actively being worked through.
Problems Facing Dapps
Several reasons are inhibiting more widespread adoption today, primarily scalability and familiarity. For instance, web-wallet tools such as MetaMask are exceedingly useful to crypto users for everything from participating in token sales to exchanging non-fungible assets on decentralized marketplaces. To mainstream users outside of the crypto sphere, MetaMask is an obscure concept, and there is a real disconnect between the required knowledge to use it and the overall familiarity of general app users with the cryptocurrency and broader blockchain space.
Scalability is the primary issue facing established cryptocurrency platforms today. This is particularly noticeable with blockchain gaming, as, during periods of network congestion on Ethereum, gas costs become prohibitively high to play a game. Decentralized exchanges also lack liquidity and developing technology such as atomic swaps to help facilitate the transfer of assets on different blockchains are not yet widely established.
Solutions Moving Forward
Fortunately, the acknowledgment by the community of the need for scaling and the ongoing development of innovative solutions help to mitigate many of the concerns facing current dapp usage. Once the scalability of decentralized applications provides the infrastructure for building applications that can support vast numbers of daily users, the familiarity of blockchain technology and cryptocurrencies will follow.
Ethereum network scaling solutions like Sharding, Plasma, and Casper will help facilitate the migration of applications to the platform. Also, innovations such as the Loom Network’s sidechains for enabling scalable and trivial gaming applications will further the development of games built on blockchain systems that can compete with traditional applications. Enjin’s newly proposed ERC-1155 standard for non-fungible token creation and exchanging also represents a significant advancement in the blockchain gaming space.
Ethereum dapp browsers such as Toshi and Status should become vital tools for connecting mainstream users to cryptocurrencies by enabling seamless interaction with Ethereum and eventually other blockchains. Both are available on the Google Play and Apple App Store so they represent excellent opportunities to increase awareness and offer a glimpse of what future blockchain browsers will look like.
Usage metrics offered by tools like DappRadar show that while decentralized applications are widespread and functioning in a variety of formats, they still have a long way to go in garnering the type of adoption seen with traditional applications.
With blockchain scalability solutions on the horizon and some great new tools available for fostering adoption, scalable and practical dapps will inevitably overcome their current limitations and usher in a new era of applications.