Gu Yanxi: Why is it that the current DApp users are normal?

A recent Wall Street Journal article argues that current blockchain-based DApps are less attractive to Internet users. The article believes that although investors have invested $1 billion in various DApps, the results have been unsatisfactory. The article quotes State of the DApps data as saying that there are currently 2,700 DApp applications, but only three average daily users exceed 10,000. Of the top 50 DApps with the largest number of daily users, 30 are gaming games. The article therefore questions whether DApp can bring real value and whether it can really attract Internet users.

I think the Wall Street Journal's article is biased. The current state of DApp does have problems with the development of the application itself. In more than 2,700 decentralized applications, most of them are believed to be because they are not targeting a suitable problem in the market, or if the solution is not adequate (such as in terms of functionality, availability, and performance). Not welcomed by the market. But this is also normal. I think that for the current situation where there are many DApps and the actual number of users is small, it should be analyzed from several dimensions. In this way, we can have a correct judgment on the status quo.

First, I think the current situation is normal. If you only look at these 2,700 DApp apps and their daily usage, it's really very low usage. But it cannot be concluded that DApp is hard to bring value to society. If you look at the number of mobile apps and the number of daily users they generate, it is believed that the number of mobile apps will be larger than the number of users actually using them. But mobile apps are now an indispensable part of people's lives. If you consider the number of websites and the number of daily users of the website, then DApp's current situation is simply not worth mentioning.

Second, the scattered public chain market. At present, various public chains are constantly appearing, but the promotion and use of the public chain faces enormous challenges (see my article, so many public chains, so few applications ). With the exception of Ethereum, there is no public chain that is universally accepted by individuals and institutional users in the market. The market itself is divided by so many public chains. DApps developed on these public chains with very small market share are therefore unlikely to be widely adopted in the market. Ethereum, which has a large share of the market, is itself a problem. So on the current underlying infrastructure of such a very fragmented technology, it is impossible to have a DApp that has a very strong influence in the market.

Third, the lack of convenient development tools. Today's DApp developers also need to directly address the underlying development of blockchain technology. There are no development tools based on blockchains in the market to improve development efficiency. In the early days of the Internet, there were a variety of tools that helped developers develop easily, such as WebLogic and JBuilder. These tools greatly facilitate developers to develop a variety of Internet applications. However, in the current state of blockchain development, there is no bottom layer of the blockchain public chain that is generally accepted by the market, and there are no various development tools on top of it. Therefore, the number of decentralized applications is small, and there are fewer users, which is a natural situation.

Fourth, some good and creative applications may not be accepted by the market in a short period of time. It was definitely for the first time, and it was gradually accepted by the market. The most typical representative of this is Bitcoin. When Bitcoin first appeared in 2009, it was just a few geek toys. This situation continued until 2016, when Bitcoin and its underlying blockchain were truly recognized by the market. The R3 alliance formed by the world's major financial institutions can be said to be a milestone accepted by the market. So Bitcoin has been developed in the circle of a few enthusiasts for seven years after its birth. From this perspective, the various developments of DApp have been only three years from 2016 to the present. Perhaps a bitcoin-type killer application in the future already exists in the current 2,700 DApps, but it only takes time to accept the market.

Fifth, the application of blockchain technology is difficult to promote. The blockchain that supports smart contracts can support a variety of financial services. In fact, blockchain and encrypted digital assets will fundamentally change the existing financial and securities markets (see my article, The Structure of Digital Financial Network Ecology and Unified Exchanges and Banking Ecology ), so its application development more difficult. It is not only a technical issue, but also involves the existing currency generation mechanism ( the pawnshop mode of stable currency, the all-weather pawn shop mode of stable currency and Mervyn King, and the development direction of stable currency from monetary theory ). The structure of the capital market ( the dusk of the Nasdaqs ) and the revision of relevant regulatory policies (the ruling of SEC regulation ). Therefore, its slow development process is normal. This is completely different from the Internet. Internet applications support information exchange, single function, low development threshold, no changes in regulatory policies, and only impact on some industries. These characteristics determine that Internet applications can be rapidly developed and widely used. Therefore, the development and promotion speed of block-based DApps cannot be measured based on the speed of development and promotion of Internet applications.

Sixth, the limitations of the DApp itself. In addition to the above reasons, the DApp itself has inherent problems. Blockchain networks are point-to-point exchanges that support digital assets. Assets and currencies in the real world are under the supervision of various jurisdictions, and are in the hands of various financial institutions based on centralized systems, such as banks, securities companies and asset custody companies. The biggest application area for decentralization is the exchange of assets and funds (such as the betting games mentioned in the Wall Street Journal article). But if the DApp can't meet the regulatory requirements of each place, it's impossible to get a large number of users (see my article, why does DeFi need to be compliant? ). Not only that, but completely decentralized financial applications will certainly be resisted and banned by local authorities. This will further limit the development of DApp. In fact, regulation around the world is now becoming more and more cooperative in this regard. Some applications in this area may not be developed in the first place. For example, the Financial Action Task Force, which works with multiple national regulators, is now asking digital financial service providers to know the identity of both parties to the transaction. This actually requires the DApp to be unable to trade with anonymous users. Therefore, a completely decentralized financial transaction is difficult to gain widespread acceptance in the market. It can only be limited to a very small market segment, so the number of users who can use such an application will naturally be very small.

In summary, the current number of DApps is large, and the actual number of users is very normal. Such a technology that fundamentally changes the foundations of society's operations cannot be done overnight. Be patient.

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