Decentralized financial applications (DApps) are applications that are built on blockchain and smart contract technologies. DApps are open-source, permissionless, and their rules and data are transparent to be inspected by anyone.
The main advantage of DApps are as follows:
- Lack of a central authority: unlike conventional organisations, there is no corporate or governmental entity with complete power to interfere with the transactions or governance of the system.
- Innovation: the advantages of inherent privacy, security and automated transactions open the space to innovation in many areas such as gaming, gambling, insurance, financial instruments, NFTs’ etc.
- Security: the security of a dApp is provided by the blockchain upon which it resides.
integration with DeFi ecosystems: because most dApps use tokens that reside on popular blockchain protocols such as Ethereum and BSC, there can be seamless interoperability and transaction among the many complimentary dApps on these protocols.