DApps: Apps That Run on a Blockchain Instead of a Company's Server
What actually makes an application 'decentralised', and why that label covers a much wider range of genuine decentralisation than the marketing suggests.
By Firoz Khan|29 August 2026|Updated 11 October 2026|3 min read
A DApp, a decentralised application, runs its core logic on a blockchain via smart contracts rather than on a company-owned server. In theory that means no single company can unilaterally shut it down, change its rules, or seize user funds. In practice, how decentralised a given DApp actually is varies enormously behind an identical label.
Ethereum.org defines a dapp as an application built on a decentralised network that combines a smart contract and a front end. Its backend code runs on a decentralised peer-to-peer network, while the front end can be hosted on decentralised storage such as IPFS. It lists benefits such as zero downtime once a contract is deployed and no single entity being able to block users from submitting transactions. It also lists costs: dapps can be harder to maintain because code and data on the blockchain are hard to change, and some solutions may end up looking like centralised services anyway.
What actually runs on-chain versus off
A DApp's smart contracts, the logic handling funds and core rules, typically run on-chain, verifiable and generally unstoppable by any single party once deployed. The user-facing website or app you interact with, however, is very often hosted conventionally, on normal servers a company controls, which means that front end can be taken down even while the underlying contract keeps working.
Why that distinction matters in practice
If a DApp's website disappears, whether from a legal order, a hack, or the team simply stopping maintenance, the underlying smart contract usually still exists and can often still be interacted with directly, just without the convenient interface most users rely on. This has happened to real, well-known DApps and is a genuine, not hypothetical, risk to understand.
A swap on a decentralised exchange, step by step
- You connect your wallet to the site. This does not move funds.
- You approve the token for the contract, setting how much it may move.
- You sign the swap and pay a network fee, win or lose.
- The contract exchanges the tokens and sends the result to your wallet.
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If the site later disappears, the contract usually still exists, but you may need another interface to use it, and any old approvals stay in place until you revoke them.
Common categories worth knowing
Decentralised exchanges let users trade directly from their own wallets without a central custodian holding funds. Lending protocols let users borrow and lend without a bank. Decentralised social and gaming apps aim to give users more ownership over their data or in-game assets than a conventional platform typically allows.
What to check before trusting one with real funds
Whether the smart contract has been independently audited, how much of the total value locked sits with a small number of wallets, and whether the team retains any special administrative control, an 'admin key', that could override the supposedly decentralised rules. 'Decentralised' is a spectrum, not a guarantee, and it's worth checking where on that spectrum a specific DApp actually sits.
What you are signing when you connect a wallet
The common token standard, ERC-20, includes an approve function, which lets a contract move tokens from your wallet up to a limit you set. Many dapps ask for an approval before they can trade or lend your tokens. Read the amount before you confirm, be wary of requests that ask for far more than you are using, and periodically review and revoke old approvals with a token approval checker. This is general good practice, not a guarantee against loss.
The UK view
Using a dapp is not covered by the Financial Services Compensation Scheme, and the FCA says crypto is largely unregulated in the UK. For tax, swapping tokens on a decentralised exchange is a disposal for Capital Gains Tax, like any other swap. HMRC has a section of its Cryptoassets Manual on decentralised finance, covering lending and staking, and a policy paper published on 13 July 2026 will change how Capital Gains Tax applies to some lending and liquidity pool arrangements from 6 April 2027. Keep a record of every interaction, including its date and value in pounds.
How to read a DApp's own claims
- "Audited" tells you who looked at the code and when, not that it is safe.
- "Decentralised" is worth testing: who can change the rules or pause the contract?
- "Total value locked" can be dominated by a few wallets.
Where to read more
- CeFi vs DeFi: the other side of the choice
- Gas fees explained: what each interaction costs
- The cryptography behind crypto: how signing works
- Crypto taxes in the UK: disposals on decentralised exchanges
A reminder
The FCA risk warning still applies to higher-risk crypto content. Always assess how much risk you are willing to take before buying.
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