What does matter in the success of a decentralized application? From idea to development

Abstract

Context: With the rise of blockchain, various applications are running in a decentralized manner, covering the needs of various end-users. Decentralized Applications (DApps) are becoming popular in numerous application domains, ranging from finance to games, and from Non-Fungible Tokens to security mechanisms. The success of a DApp, from a financial perspective, can be perceived as the market fragment that it captures, and the volume of transactions it generates. Objective: The goal of this study is to investigate the factors that are important for safeguarding (as much as possible) the financial success of a Decentralized Application. In this study, we focus on four management factors that could influence financial success: the context of the DApp (e.g., focusing on finance, games, entertainment), the intensity of development activities (e.g., number of: commits, forks, or branches of the repository), the size of the development team and the existence of project documentation. Method: We performed a case study on 122 DApps that were available through an open repository of smart contracts, namely State-of-the-DApps. By mining the repository, we recorded two metrics that capture the financial success of the application (number of users and volume of transactions) and explored their relation to the aforementioned factors. Results: The findings of the study suggest that the intensity of development activities is the most important factor for its financial success. Similarly, the context (i.e., the application domain) of the decentralized application is also a key-factor since it influences the number of users that the DApp will reach. Conclusions: Based on the findings, we suggest businesses that want to enter the market of decentralized applications to balance properly between technical and business parameters. For an application to be successful, it requires both an intensive development process, but also a careful consideration of the application domain.