What the dApp: Can We Really Trust dApps in 2022?
Disclaimer: The Industry Talk section features insights by crypto industry players and is not a part of the editorial content of Cryptonews.com.
Decentralized applications, known as dApps, have emerged as one of the hottest trends in the cryptocurrency world, bringing with them the promise of a freer internet with, financial inclusion, true anonymity and no censorship.
dApps are without doubt an important step on the way to creating a fully decentralized web, offering a number of use cases around banking the unbanked, investing, borrowing and more
Unfortunately, like everything crypto-themed, the growing popularity of dApps means they’ve also become a very useful vehicle for scammers who’re only too keen to empty the wallets of unsuspecting crypto enthusiasts. Reports of people falling victim to dApp scams abound of late, with the bad guys coming up with some ingenious methods to trick people into giving them access to their crypto wallets, posing as customer support staff among other tricks. It’s a growing phenomenon too, with recent research from the blockchain analytics firm Elliptic finding that DeFi fraud hit USD 10.5 Billion in 2021.
The easiest way to lose money is to fall victim to what’s known as a “malicious dApp” that has been designed to trick users into thinking it serves a genuine purpose. The problem is they’re entirely fake, and the moment a user connects their crypto wallet to it, their funds will be gone forever.
Other hackers try to exploit genuine apps too. Some dApps, especially new or less popular ones, may have issues with their code that allows hackers to find vulnerabilities and steal user’s funds. Another big problem is “phishing dApps”, which are designed to look and feel exactly like a genuine dApp. So for example, if someone creates a legitimate dApp called “123finance.com” and it starts getting popular, the scammer may create a fake domain at “1234finance.com” and hope to trick users into thinking it’s the real deal. Of course, the fake domain only exists to steal people’s funds.
Securing the dApp world
The good news is that the dApp ecosystem is evolving fast, and cautious crypto users have access to a variety of tools they can use to protect themselves against nefarious dApp swindles and schemes.
One of the best resources for dApp security is DappRadar, which is a community governed platform that ranks the world’s dApps according to various categories, allowing users to track them, analyze their performance, discover promising new ones and most importantly, those that are not to be trusted.
One of the key capabilities of DappRadar is it allows users to search for dApps (such as an investment dApp or a trading dApp) they want to use while filtering out those that might be considered confusing or risky. Other features include tracking dApps’ transaction activity, active user base and token volume. These things are all useful to know, as a strong community and high token volume is indicative of a genuine and secure dApp.
DappRadar is taking further steps to boost confidence in dApps with the recent launch of its B2B dApp marketplace, seeking to help businesses integrate trusted dApp capabilities. That came shortly after DappRadar announced its upcoming RADAR token that aims to incentivize user feedback on their dApp experiences.
Users of dApps can also protect themselves with the aid of decentralized digital identity wallets such as Safle. The SafleID wallet is an EVM-compatible smart contract wallet that supports Ethereum, Polygon, Binance Smart Chain and other well known blockchains. With its cross-chain nature, it allows users to interact with a variety of dApp protocols while securing both their wallet addresses and private security keys through the Safle Vault. It also provides an SDK for developers to integrate SafleID wallet within their dApps, protecting users from having their identities compromised.
Other initiatives aimed at protecting dApp users include NCC Group’s Decentralized Application Security Project, which is an open and collaborative project that’s trying to categorize and rank all of the known smart contract vulnerabilities within the DeFi ecosystem.
With interest in DeFi accelerating and more users joining the fray every day, participants are increasingly paying attention to the security concerns of dApps. That said, users need not be afraid of the dApp landscape. With the availability of tools like DappRadar and Safle, stakeholders understand the need to show a greater sense of responsibility.
The dApp industry has every incentive to employ higher standards of trust to ensure the confidence of its users. As more dApps move to embrace those principals, the industry will get that much closer to the goals of true financial anonymity and inclusion at the heart of its promise.