Dapp is a portmanteau of Decentralized Application and refers to computer programs which run on the blockchain and which have self-enforcing business logic implemented via smart contracts.
These programs follow a trustless model, since they do not require parties to know or trust each other in order for the logic to run completely and without fraud.
For these reasons, Dapps are perfect for financial applications where parties may establish business relationships and exchange value anywhere around the world without even knowing each other.
In order to create a self-enforcing smart contract containing a business agreement, all one has to do is develop the application in a special programming language and deploy it on the blockchain.
Examples of Dapps include decentralized cryptocurrency exchanges (DEX), cryptocurrency tokens (like LINK AND YFI), DAOs and many other systems which use a blockchain to maintain state and execute business operations.
Some may be surprised to find out that tokens are nothing but Dapps! For example, the top 5 DeFi tokens in circulation today are all tokens which exist on the Ethereum blockchain:
For example, Ethereum tokens are a kind of Dapp which implements a standard interface called ERC20. A Dapp which implements ERC20 is automatically detected as a new cryptocurrency token on the Ethereum blockchain.
Decentralized cryptocurrency exchanges seem to be a popular field of research about smart contracts. Such Dapps would allow the free and secure exchange of coins and tokens through a self enforcing smart contract.
This way there would be no stolen funds, no centralized storage of funds and no centralized control over cryptocurrency exchanges.