Bitcoin, Axie, Opensea, Brave, Metamask, Uniswap. All these are examples of decentralized websites. These can be anything from payment methods to games, marketplaces, browsers, wallets, exchanges.
But what are they exactly?
Decentralized websites can be as broad as explaining the blockchain. But whether you’re new to crypto or an experienced trader, you’re at the right place. Here’s a simple guide of everything you need to know:
- How decentralized websites are different (if not better) than traditional Internet
- Types of decentralized websites with examples and how to use each one
- Plus all closely-related buzzwords, from L1s to WEB3
To make the most of it, let’s start with what decentralized websites mean for traders.
What Are Decentralized Websites?
Anything decentralized involves collective management and distribution. Applied to the Internet, decentralized websites share system management with other peers of the organization (also known as DAOs). It’s a complex, abstract term that means little unless you specify what that website does.
What’s complex is, websites often require other websites to run. That’s what we call the Internet infrastructure:
- Protocols (HTTP)
- Hardware (IBM)
- Operating systems (Android)
- Browsers (Firefox)
- Domains (Namecheap)
- Hosting (GoDaddy)
All tech companies behind these make the Internet possible. And whoever runs these organizations has most of the control. So while they’re distributed, traditional websites are mostly centralized.
That’s the problem decentralized websites are trying to solve. To make possible peer-to-peer website management and all applications (dApps) that come thereafter.
Decentralized websites are, in short:
a. Infrastructure
b. Protocols
c. Applications
Infrastructure and protocols create the decentralized web, WEB3. Decentralized applications build on the WEB3 for countless niches and purposes.
But will these websites replace traditional ones? To find out, here’s an overview of how WEB3 started.
The First Decentralized Websites
Decentralization isn’t new today. It’s what Bitcoin is known for since it launched in 2009 (and theorized in the early 90s). You can go as far as the 19th century when the French coined this term to restructure their government.
Bitcoin didn’t replace the Internet but expanded it. Many decentralized currency websites came after. Which led to the first exchanges, wallets, and developer platforms.
As for other notable pioneers:
- Ethereum, the first infrastructure and smart-contract website launched in 2015
- The DAO, the first autonomous organization launched in 2016 (now unavailable)
- BitcoinMarket, the first-ever crypto exchange launched in 2010 (now unavailable)
Also worth noting the first crypto wallet (Electrum), DeFi app (MakerDAO), WEB3 wallet (Metamask), videogame (CryptoKitties), and NFT marketplace (Larva Labs).
Examples of Decentralized Websites
WEB3 is work-in-progress, and as new features appear, new websites follow them. Whether it’s a full-fledged platform or a standalone crypto domain.
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dieanother.day
Types of Decentralized Websites (With Examples)
If the decentralized web (DWeb) still sounds too abstract, that’s normal. Once you see some real examples and variations, it becomes easier to see the big picture.
You can define the decentralized Internet as the group of WEB3 (foundational) websites and applications. Once you have the foundations, however, there’s no limit to how many applications you can find. That’s why we’ll focus on WEB3s while grouping all other apps as ‘Use-Cases.’
Access Websites
To explain what these are, go to the previous list of domain examples. Pick any crypto domain and search for it. Whichever you choose, it may seem these websites are broken (or are they?).
That’s because decentralized websites use protocols that most browsers don’t recognize. If you try to search the same domain with an IPFS browser like Brave (more on that later), they now load normally. Eventually, when protocols standardize, you should be able to visit from any browser.
But browsers are just one example of Access websites. Wallet-based websites are more common. They’re free to visit like any other website but to access the (blockchain) features, you need to connect your WEB3 wallet (e.g., Metamask).
Decentralized websites are often built like this:
- A traditional website with information about the project (e.g.,Uniswap.org)
- The decentralized app, which may or may not require Wallet Connection to load app.uniswap.org).
WEB3 wallets can be apps, Chrome extensions, or both. The websites that require these are called dApps, and they often accept multiple providers. Metamask, Shapeshift, Trust Wallet, Atomic Wallet, Coinbase Wallet, Gnosis, Crypto.com…
Out of the four types, Access Websites are the only ones you need to set up manually to access everything else. These already include protocols and infrastructures by default.
But to freely access any website, you may need a WEB3 wallet (which is free and private) and an IPFS browser.
Infrastructure Websites
While browsers and wallets allow access, these wouldn’t work without the infrastructure. Websites offering storage, security, transaction methods, crypto domain registrars, communications, analytics. Infrastructure websites are developers’ tools combined together to build dApps.
Traditionally, developers have two choices:
- To build your own website infrastructure
- To buy or rent it from another company
On decentralized websites, that ‘other company’ isn’t a specific entity. It’s a distributed, decentralized autonomous organization (DAO). In practice, it looks like this:
Suppose you want to develop a DeFi app, with features like trading, staking, or lending. You can buy from websites like Aave (a transaction infrastructure website) to instantly add these to your app. If you need more network bandwidth (e.g., due to traffic), you just buy more Aave tokens.
Another clearer example is aggregators. These apps can automatically compare 10s of infrastructure websites to show the most relevant one (like a search engine). For example:
- When trading on 1Inch, the app gathers quotes from decentralized exchanges (from Uniswap to dYdX), so you can choose the most convenient one.
- When yield-farming on Yearn Finance, you can automatically switch funds to whatever pool offers the highest Annual Percentage Yield.
- NFTrade aggregates marketplaces from many blockchains (Opensea, Magic Eden, Immutable X…), so you can see all marketplaces from one place.
Protocol Websites
If infrastructure websites are primitive apps, protocol websites are the rules created to build those primitives. It’s the programing language, functions, and blockchain properties. The decentralized websites you can build will depend on these protocols.
For example, Ethereum is a ‘protocol layer’ website. Because of its architecture, this blockchain has high usability and low scalability. You can build many apps with its smart contracts, but because of network volume, it can be slow and expensive.
Ethereum works fine for decentralized exchanges (DEXs) like Uniswap. But what if you’re building an app that needs efficiency? Maybe it’s a high-liquidity DeFi app, maybe it’s a play-to-earn game with micro-transactions.
You’d use an ETH alternative like Polygon, Binance Smart Chain, or Solana. We won’t get much into what makes each blockchain different. The idea is, every blockchain allows for different website types due to features and limitations.
Overall, these are all protocol websites you’ll find:
- Layer-1 Protocols (L1s): Foundational blockchains and rules (Bitcoin, Ethereum, Solana…)
- Layer-2 Protocols (L2s): Improved blockchains built on L1s for specific features. For example, Polygon optimizes DEXs while Immutable is for NFTs (both built on Ethereum).
- Bridges: Since there’s no direct way to transfer assets across blockchains, bridges solve that problem. You might hold 1 BTC in an ETH wallet and transfer it to your Polygon wallet with a bridge such as Anyswap.
Use-Case Websites
With protocols, infrastructure, and access websites, there’s no limit to what you can build on the DWeb.
- Financial Services to leverage and generate passive cryptocurrency. E.g., Aave, Curve.fi, Compound, PancakeSwap, 1Inch, Crypto.com.
- Marketplaces to list and trade NFTs. E.g. Opensea, Rarible, Nifty Gateway, Solanart, Atomic Market.
- Crypto Gaming to monetize games and earn by playing. Axie Infinity, Illuvium, TheSandbox, Gala Games, Ultra.
- Tokenization and fractionalization to make illiquid assets more accessible to buyers. Cloudname, Consensys, Cryptoslate, BitTorrent, Decentraland.
- Internet Services to offer pay-as-you-go subscriptions, rewards, and privacy. Dent Wireless, Orchid, Basic Attention Token.
These are some areas already changed by decentralized websites. Through entrepreneurship, there will soon be applications for almost every sector.
Decentralized vs Traditional Websites
You’ve seen the different types of websites, examples, and what value these bring. How does that compare to the traditional website? Will it replace the Internet, expand it, or instead develop in a separate way?
Let’s compare to find out.
Decentralized Website Pros:
- Broad applications. DWeb has more applications than the traditional Internet because of blockchains. And the DAOs behind them will keep making them faster, cheaper, and feature-rich. Some of the most profitable ones may not even exist yet.
- Fewer intermediaries. Most decentralized websites have no intermediaries once developers launch them. However, the DAOs may still maintain platform fees to reinvest in their technology.
- Uninterrupted service. Decentralized networks are impliedly distributed. Because dApps run through 1000s of peers, these websites never shut down. The only way is to disable every single node or have the community vote in favor.
Decentralized Website Cons:
- Flexible but slow. Decentralization is attractive because it empowers communities. As for what influence you actually have, it depends on the size and protocol rules. In case of a cyber-attack, DAOs may take days to agree on decisions.
- Can still be centralized. Not all websites are equally decentralized. Each has different rules, which often favor the biggest holders. Maybe there’s a group of early investors who take up 50% of the voting power.
- Volatile. Most dApps rely solely on cryptocurrencies, which makes economies inconsistent. It doesn’t matter if the app is a trading bot, an NFT marketplace, or a play-to-earn game. If Bitcoin falls by 20% overnight, you will instantly lose some of your earnings.
Traditional Website Pros:
- More accessible. WEB3 websites may require you to get a special browser, open a wallet account, and add the right blockchain. That’s for every single device. By contrast, anyone with an Internet connection can access traditional websites with one click.
- Easier to update. Centralization makes it faster to agree and execute decisions. So while they might be more vulnerable, they’re more adaptable. As for dApps, it may take months to ponder suggestions, vote, and implement.
- Clear liability. In case of loss, there’s a clear entity responsible for the website. Whoever runs it is liable to disclose risks and refund policies. It’s not that clear with decentralized websites, where 1000s of members manage it collectively.
Traditional Website Cons:
- Website ownership. At all times, the website owner controls what you can do on their platform. They can disable accounts, hold funds, shut down the website, even change Terms and Conditions. Change as convenient with no notice required.
- Lack of transparency. Decentralized websites are built by and for their members. The moment you divide into business owners and users, both people will have different interests. As the user, you may not know nor control what the platform does with your data or money.
- Variable intermediary fees. As in the first point, platforms can change rates anytime. If you run a business or trade from these platforms, these decisions will affect your returns. And businesses almost never lower these rates.
Decentralized Websites And Their Future
Decentralized websites will make possible 1000s of new applications, which will form the WEB3 Internet. And along with it, an expanded online economy.
Traders have more tools to make consistent profits and manage risk.
Entrepreneurs have more business opportunities in major sectors.
Consumers have more features and ways to earn, whether it’s games, data, or NFTs.
All of which benefits DWeb investors and developers.
The easiest way to start a decentralized website is to buy a domain. You’ll find many tradeable domains, from the good old .com to .crypto, .eth, .nft. Trade, rent, or tokenize domains, all in one place and in real-time.