Spencer Li

What Are dApps and DAOs? Decentralised Apps and Organisations Explained

dApps and DAOs explained - crypto

Last updated: 8 September 2026 · By Spencer Li, CFTe

A dApp, short for decentralised application, is an app whose core logic runs as a smart contract on a blockchain such as Ethereum, instead of on one company’s servers. A DAO, a decentralised autonomous organisation, is a group that runs by rules written into a smart contract, with a shared treasury that members control by voting. Both promise to remove the middleman. Both also move the risk somewhere new: into the code, and into whoever holds the votes.

In this post, I’m going to explain how each one works, quoting Ethereum’s own documentation, then cover the risks that rarely make the brochure. I will not name any app or DAO to use. The goal is to give you the questions to ask about any of them.

Ask who can change the rules, and how. Summary card for the post: What Are dApps and DAOs? Decentralised Apps and Organisations Explained.

What is a dApp?

Ethereum.org says smart contracts “let anyone create their own digital assets and decentralized applications (dapps) that run 24/7, globally.” It adds that, unlike banks or corporations, “smart contracts are available to anyone with an internet connection.”

The simplest way to picture a smart contract is ethereum.org’s own metaphor, a vending machine, where “specific inputs guarantee predetermined outputs.” A dApp is a friendly screen in front of one or more of those machines. You connect your wallet, press a button, and the contract does the rest.

dApps cover a wide range. Ethereum.org groups them into categories, such as:

  • DeFi, “a category of decentralized applications that allow users to lend, borrow, trade, and earn interest on their crypto assets.”
  • Social, apps “that allow users to connect with others and share content.”
  • Gaming, apps “that allow users to play games and earn rewards.”

Decentralised finance (DeFi) goes deeper on the first group.

How is a dApp different from a normal app?

Here is the comparison in one table:

A normal appA dApp
Where the logic runsThe company’s serversA smart contract on a blockchain
Who can block youThe companyUsually nobody at the contract level, though the website in front can
How you log inUsername and passwordYou connect your own wallet
If something goes wrongCustomer support, refundsOften no one to call, and transactions cannot be reversed
Who can see the recordsThe companyAnyone, on the public blockchain

Ethereum.org puts the main selling point plainly: “dapps on Ethereum are censorship resistant.” The other side of that is the last row but one. With no company in charge, there is also no help desk.

If you want a daily routine for trading what you understand, the free 15-Minute Swing Trader’s Checklist is at the end of this post.

What is a DAO?

Ethereum.org’s definition is short: “A DAO is a collectively-owned organization working towards a shared mission.”

The idea is to replace trust in people with rules in code. In ethereum.org’s words, “There is no CEO who can spend funds on a whim or CFO who can manipulate the books.” Instead, DAOs “have built-in treasuries that no one has the authority to access without the approval of the group.”

Ethereum.org gives a few examples of what a DAO could be used for. One is a charity that accepts donations from anywhere and votes on causes to fund. Others are a group buying an asset together, or a pooled fund that votes on which ventures to back.

How does a DAO make decisions?

Through proposals and votes. Ethereum.org explains that the smart contract “defines the rules of the organization and holds the group’s treasury.” Once it is live, “no one can change the rules except by a vote.”

There are 3 main ways DAOs decide who gets to vote:

Membership typeHow you get a voteWhat ethereum.org says
Token-basedHold the DAO’s governance token“simply holding the token grants access to voting”
Share-basedApply to join, usually with a contribution“Shares represent direct voting power and ownership”
Reputation-basedEarn it by taking part“Reputation cannot be bought, transferred or delegated”

Many DAOs also allow delegation, which ethereum.org likens to “representative democracy”. Token holders hand their votes to members who commit to stay informed. And “In many DAOs, transactions will be automatically executed if a quorum of members votes affirmative.”

What are the risks of dApps and DAOs?

This is the part the enthusiasm tends to skip. I use a single question to sort most of it out. I call it the who-can-change-it test: for any dApp or DAO, who can change the rules, and how?

The 4 risks below all come back to that question.

The code can have bugs

Ethereum.org admits it directly: “Ethereum products, like any software, can suffer from bugs and exploits.” When a bug sits in a contract holding money, the money is what gets taken.

The code is hard to fix

Ethereum.org says “Smart contract code can’t be modified once live, even by its owners.” That is a strength when the code is right. It is a problem when the code is wrong, because a fix may need a new contract and a move of funds. Some projects build in a way to upgrade the contract. If so, ask who holds that power, because that person or group can change the rules too.

Votes can be concentrated

In a token-based DAO, votes follow tokens. If a few holders own most of the tokens, they can decide most votes. Ethereum.org’s own examples include a DAO where a vote passes “as long as it is not vetoed by the founders”. So founders can keep real power inside a “decentralised” structure. Check who holds the tokens before you assume a DAO is run by its community.

A few big token holders and many small ones; the vote bar below is mostly taken by the few big holders
In a token-based DAO, votes follow tokens, so a few big holders can decide.

The token may be a regulated product

MAS said in 2017 that tokens can fall under securities law. If a token gives you ownership in an issuer’s assets, it “may therefore be considered an offer of shares or units in a collective investment scheme”. A governance token that also pays out a share of income deserves a careful look on that front.

So should you use dApps or join a DAO?

Personally, I think dApps and DAOs are worth understanding even if you never use one, because they show what blockchains are for beyond holding coins. But the who-can-change-it test comes first, every time. If you cannot find out who can change the rules, you do not yet know what you are trusting.

For the background, the blockchain and cryptocurrencies guide maps the topic. What is Ethereum explains the network most dApps run on. And coins, tokens, altcoins and ICOs covers the tokens that DAOs use for votes.

So the next time a dApp or DAO catches your eye, who can change its rules? Who holds most of its votes? And if its code failed tomorrow, who would you call?

FAQ

What is a dApp in simple terms?

An app whose core logic runs as a smart contract on a blockchain, instead of on a company’s servers. You use it by connecting your own crypto wallet.

What is a DAO in crypto?

A group governed by rules written into a smart contract. Members vote on proposals, and the contract releases funds from the shared treasury when a vote passes.

Are DAOs legal in Singapore?

This post does not give legal advice. MAS has said that tokens which act like shares or fund units can be regulated under the Securities and Futures Act, so check the rules before buying any governance token.

Are dApps safe?

They carry risks normal apps do not: smart contract bugs, no customer support, and transactions that cannot be reversed. Check who can change a dApp’s rules before you connect your wallet.

Go deeper

The free 15-Minute Swing Trader’s Checklist has the daily routine, the questions to ask before every trade, and the five rules that keep you in the game.

About the author. Spencer Li is The 15-Minute Trader and the founder of Synapse Trading. He is a Certified Financial Technician (CFTe) with 15+ years of trading, run from 70+ countries. He holds a B.Acc and B.BM from SMU. Every trade he takes is public, dated, losses left in. He teaches rules-based swing trading in 15 minutes a day, one system for any market.

Educational content only, not personalised financial advice. Trading carries risk, including loss of capital. Past performance is not indicative of future results. Synapse Trading is not licensed or regulated by MAS.

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Spencer Li

Staking vs Yield Farming vs Liquidity Mining: Where the Yield Comes From

Where crypto yield comes from - crypto

Last updated: 13 September 2026 · By Spencer Li, CFTe

Staking, yield farming and liquidity mining all pay you a return on crypto, but the money comes from 3 different places. Staking pays you for helping to secure a proof-of-stake blockchain, out of new coins the network creates. Yield farming means putting crypto into DeFi apps to earn trading fees, interest or reward tokens, often moving between apps to chase the best rate. Liquidity mining is one kind of yield farming, where an app hands out its own tokens to people who supply its trading pools.

The question that matters most is the one in the headline: where does the yield come from? If you can answer that, you can usually see the risk. If you cannot, the yield is probably paying you to carry a risk nobody has explained.

In Singapore, there is one more fact to know first. Since 2023, MAS has restricted licensed crypto service providers from offering lending and staking to retail customers. More on that below.

Before chasing a yield, name who pays it. Summary card for the post: Staking vs Yield Farming vs Liquidity Mining: Where the Yield Comes From.

What is staking?

Staking is how proof-of-stake blockchains such as Ethereum are kept honest. Ethereum.org defines it as “the act of depositing ETH to activate a validator, a participant in Ethereum’s consensus protocol.” Validators propose new blocks and check each other’s work, and the protocol rewards them in ETH for doing it properly.

Running your own validator needs a lot of ETH. Ethereum.org says “Your own validator requires at least 32 ETH and can hold up to 2048 ETH.” Smaller holders can join a pool or use an exchange, but ethereum.org warns that pooled staking is run by third parties who “carry their own risks: the protocol pays rewards to the pool’s validators, not to you directly.”

The main risk built into staking is called slashing. In ethereum.org’s words, provable misbehaviour, such as signing 2 conflicting blocks, “results in slashing: part of the validator’s stake is destroyed and the validator is forcibly removed from the network.”

If proof of stake is new to you, proof of work versus proof of stake covers the basics, and our earlier post on staking crypto goes into more detail.

What is yield farming?

Yield farming is the broader DeFi practice of putting crypto to work in lending and trading apps. Ethereum.org describes DeFi as a world where “you can lend, borrow, long/short, earn interest, and more.”

Most of it runs on pools. In pool-based lending, ethereum.org explains, “lenders provide funds (liquidity) to a pool that borrowers can borrow from.” Decentralised exchanges work the same way: traders swap tokens against a pool of 2 tokens supplied by other users, and pay a fee that goes to those suppliers.

A yield farmer supplies crypto to these pools and collects the interest and fees. The “farming” part is the moving around. Farmers shift funds between apps and pools, chasing whichever one pays the most that week. Every move costs transaction fees and adds another smart contract to trust.

What is liquidity mining?

Liquidity mining is a type of yield farming where the app pays you extra, in its own newly created token, for supplying its pools. It is how many DeFi apps attracted users early on.

That makes liquidity mining the most fragile of the 3. The fees and interest are paid by real users. The reward tokens are paid by the app printing them. If many farmers sell those tokens as soon as they receive them, the token’s price can fall, and the high advertised yield shrinks with it.

If you want a daily routine for trading what you understand, the free 15-Minute Swing Trader’s Checklist is at the end of this post.

Where does the yield actually come from?

Here are the 3 side by side:

StakingYield farmingLiquidity mining
What you doLock coins to help secure a networkSupply crypto to DeFi lending or trading poolsSupply crypto to an app’s pools
Who pays youThe network, in new coins and feesBorrowers’ interest and traders’ feesThe app, in its own new tokens, plus fees
Main risksSlashing, the coin’s price, the pool or exchange you stake throughSmart contract bugs, impermanent loss, the coins’ pricesAll the yield farming risks, plus a falling reward token
How lasting is the source?Tied to the network’s own rulesTied to how much real borrowing and trading there isOften temporary, set by the app

I call this the source test. Before you chase any yield, name who is paying it. If the answer is “the network,” “borrowers” or “traders,” you can judge whether that demand is real. If the answer is “new tokens the app creates,” the yield depends on someone else wanting to buy them.

Who pays each yield: the network pays staking, users pay yield farming, and the app's new tokens pay liquidity mining
Before chasing a yield, name who pays it; new app tokens are the shakiest source.

What is impermanent loss?

This is the risk most new liquidity providers do not see coming. When you supply 2 tokens to a trading pool and their prices move apart, the pool rebalances your share automatically. You end up with less of the token that rose and more of the one that fell.

Here is a worked example with simple numbers. Suppose you supply 1 ETH and 2,000 USDC (a dollar-linked token) to a pool when 1 ETH is worth 2,000 USDC. Your deposit is worth 4,000 USDC.

Then ETH doubles to 4,000 USDC. In a standard pool of this kind, your share rebalances to about 0.7071 ETH and 2,828 USDC:

0.7071 × 4,000 + 2,828 = about 5,657 USDC

If you had simply held the 1 ETH and 2,000 USDC, you would have 6,000 USDC. The gap is about 343 USDC, or 5.72%. That gap is the impermanent loss. The same 5.72% applies if ETH halves instead of doubling. Fees earned from the pool may cover it, or may not.

It is called “impermanent” because it shrinks if prices return to where they started. If you withdraw while they are apart, it becomes permanent.

What has MAS said about staking and lending?

MAS has acted on this directly. In July 2023, it said it would “restrict DPT service providers from facilitating lending and staking of DPT tokens by their retail customers.” Its reason was that “these activities are generally not suitable for retail public.” It added that providers “may continue to facilitate such activities for their institutional and accredited investors.”

So in Singapore, a licensed provider offering staking to an ordinary retail customer is a warning sign worth checking.

So which one makes sense?

Personally, I think the source test matters more than the rate. A high yield is the price of a risk, and the job is to find out which one. Staking pays for securing a network, with slashing and price risk attached. Yield farming pays for supplying real demand, with code and impermanent loss risk. Liquidity mining often pays in tokens that only hold their value while new buyers keep arriving.

None of these is a way to earn without risk, and the coins underneath can fall a long way in price whatever yield they earn. For the wider picture, decentralised finance (DeFi) explains the apps involved, and the blockchain and cryptocurrencies guide maps the topic.

So the next time you see a high yield, who is paying it? What happens to it if the token price falls? And what would you lose if the smart contract failed?

FAQ

What is the difference between staking and yield farming?

Staking pays you for helping secure a proof-of-stake network, in new coins from that network. Yield farming pays you for supplying crypto to DeFi lending or trading pools, in interest, fees or reward tokens.

Is liquidity mining the same as yield farming?

It is one type of yield farming. Liquidity mining specifically means an app pays you in its own new tokens for supplying its pools.

What is impermanent loss?

The shortfall a liquidity provider can face, compared with simply holding, when the prices of the 2 pooled tokens move apart. If one token doubles against the other, the shortfall is about 5.72%.

Can I stake crypto in Singapore?

MAS has restricted licensed providers from offering staking and lending to retail customers since 2023, saying these activities are generally not suitable for the retail public. Check the current rules with MAS.

Go deeper

The free 15-Minute Swing Trader’s Checklist has the daily routine, the questions to ask before every trade, and the five rules that keep you in the game.

About the author. Spencer Li is The 15-Minute Trader and the founder of Synapse Trading. He is a Certified Financial Technician (CFTe) with 15+ years of trading, run from 70+ countries. He holds a B.Acc and B.BM from SMU. Every trade he takes is public, dated, losses left in. He teaches rules-based swing trading in 15 minutes a day, one system for any market.

Educational content only, not personalised financial advice. Trading carries risk, including loss of capital. Past performance is not indicative of future results. Synapse Trading is not licensed or regulated by MAS.

by
Spencer Li

Coin vs Token: Coins, Tokens, Altcoins and ICOs Explained

Coin vs token - crypto

Last updated: 21 September 2026 · By Spencer Li, CFTe

A coin is the native currency of its own blockchain. Bitcoin is the coin of the Bitcoin network, and ether is the coin of Ethereum. A token is built on top of someone else’s blockchain, using that chain’s rules, so thousands of tokens can live on Ethereum without running a network of their own. An altcoin is simply any cryptocurrency other than bitcoin. And an ICO, an initial coin offering, is a fundraising sale where a project sells new tokens to the public.

Those 4 words get used loosely, even by people who should know better. In this post, I’m going to pin each one down with a source, show you where the lines blur, and give you 3 questions that sort out any crypto asset you come across.

A coin has its own blockchain; a token does not. Summary card for the post: Coin vs Token: Coins, Tokens, Altcoins and ICOs Explained.

What is the difference between a coin and a token?

The cleanest test is where it lives.

A coin has its own blockchain. The network’s miners or validators are paid in it, and every transaction on that network pays its fee in it. Without the coin, the chain does not run.

A token does not need its own chain. It is a piece of software, a smart contract, sitting on an existing blockchain. On Ethereum, most of these follow a shared template called ERC-20. Ethereum’s own documentation says ERC-20 “introduces a standard for Fungible Tokens”, where each token is “exactly the same (in type and value) as another Token.”

A coin is part of its own chain of blocks, while tokens sit on top of a chain that belongs to someone else
A coin runs on its own blockchain; a token sits on someone else’s.

The same page lists what tokens can stand for. In its words, “Tokens can represent virtually anything in Ethereum.” Its examples include “reputation points in an online platform”, “skills of a character in a game” and “financial assets like a share in a company”. It also lists “a fiat currency like USD” and “an ounce of gold”.

So when someone says they bought a token, you still know very little. You need to know what the token stands for.

What does each word actually mean?

Here is the whole vocabulary on one page:

TermWhat it isHas its own blockchain?Example of the type
CoinThe native currency of a blockchainYesBitcoin on the Bitcoin network, ether on Ethereum
TokenAn asset created by a smart contract on another chainNoAn ERC-20 token on Ethereum
AltcoinAny cryptocurrency other than bitcoinUsually, though people also use it for tokensEvery coin launched after bitcoin
StablecoinA token designed to hold a steady value, often against the US dollarUsually noDollar-linked tokens
NFTA token where each one is unique, so no 2 are interchangeableNoDigital art or collectibles
ICOA sale of new tokens to raise money for a projectNot an asset, a fundraising eventThe 2017 wave of token sales

The examples show the type only, and none of them is a suggestion. If you want more on 2 of these, what is a stablecoin and what is an NFT go deeper.

If you want a daily routine for trading markets you can actually analyse, the free 15-Minute Swing Trader’s Checklist is at the end of this post.

Why do people mix up coins and tokens?

Mostly because the word “coin” is used for everything. Exchanges list coins and tokens side by side, with the same price chart and the same buy button. Plenty of tokens even have “coin” in their names.

There is a second reason. Some projects start as a token on Ethereum, then launch their own blockchain later and swap holders over to a native coin. The same asset can be a token one year and a coin the next.

So the label matters less than the 3 facts underneath it. Which brings me to the test I use.

How do you work out what you are holding?

I call this the 3-question token check. Run it on anything before you buy it:

1. Whose chain is it on?

If it runs its own network, it is a coin, and its value is tied to whether that network keeps being used and secured. If it sits on another chain, it is a token, and it depends on both that chain and the smart contract that created it. A bug in the contract can hurt a token even when the chain underneath is fine.

2. What right does it give you?

This is the question most buyers skip. A token might give you a vote, access to a service, a claim on some income, or nothing at all beyond the token itself. Read what the project says it does, in writing, and notice if the answer is vague.

3. Who sold it, and to whom?

Find out who created the token, how many exist, and how many the founders kept. If insiders hold a large share, they can sell into any rise in price. That is a risk you take on the day you buy, whether you know it or not.

What is an ICO, and how does MAS treat one?

An ICO is how many crypto projects raised money, especially in 2017. The project sold new tokens directly to the public, usually in exchange for bitcoin or ether, often before the product existed.

MAS stepped in that year. On 1 August 2017, it said “the offer or issue of digital tokens in Singapore will be regulated by MAS if the digital tokens constitute products regulated under the Securities and Futures Act”. It noted that its statement came “in the wake of a recent increase in the number of initial coin (or token) offerings (ICOs) in Singapore”.

The same release gave a definition worth keeping: “A digital token is a cryptographically-secured representation of a token-holder’s rights to receive a benefit or to perform specified functions.” Then it drew the line. If a token represents ownership in an issuer’s assets, it “may therefore be considered an offer of shares or units in a collective investment scheme”. Where a token counts as a security, it said “issuers of such tokens would be required to lodge and register a prospectus with MAS prior to the offer of such tokens, unless exempted.”

So the regulator’s test is close to question 2 above. It looks at what right the token carries. A token that works like a share gets treated like one, whatever the project calls it.

Are altcoins riskier than bitcoin?

There is no single answer, because “altcoin” covers thousands of assets. Some are large networks, and some are a website and little else. What can be said is that every extra layer adds a way to fail. A token depends on its chain, its contract and its team. A new coin depends on whether anyone keeps securing its network.

MAS has been plain about crypto as a whole. In a 2022 reply in Parliament, it said cryptocurrencies “are purely speculative as an investment asset, and have no intrinsic value.” Supporters of crypto would dispute that. But it tells you how Singapore’s regulator sees the asset class you are buying into, and that view shapes the rules you trade under.

So what should you remember?

Personally, I think the coin-versus-token label is the least useful fact about any crypto asset. What it does, who controls it, and who already owns most of it tell you far more. The words are worth knowing so you can read a project’s documents. The 3 questions are what protect your money.

For the bigger picture, the blockchain and cryptocurrencies guide maps the whole topic, and the function of a cryptocurrency coin looks at what a coin is meant to do.

So the next time a new token is trending, whose chain is it on? What right does it actually give you? And how much of it do the founders still hold?

FAQ

What is the difference between a coin and a token in crypto?

It comes down to where each one lives. Coins run on their own blockchain, while tokens are created by a smart contract on someone else’s, such as an ERC-20 token on Ethereum.

Is ether a coin or a token?

Ether is a coin. It is the native currency of the Ethereum network, used to pay transaction fees there.

What is an altcoin?

Any cryptocurrency other than bitcoin. People often use the word for tokens too, even though tokens do not have their own blockchain.

Are ICOs legal in Singapore?

MAS said in 2017 that a token offer is regulated if the token counts as a product under the Securities and Futures Act, which can mean a prospectus and licensing. Check the current rules with MAS before taking part in any token sale.

Go deeper

The free 15-Minute Swing Trader’s Checklist has the daily routine, the questions to ask before every trade, and the five rules that keep you in the game.

About the author. Spencer Li is The 15-Minute Trader and the founder of Synapse Trading. He is a Certified Financial Technician (CFTe) with 15+ years of trading, run from 70+ countries. He holds a B.Acc and B.BM from SMU. Every trade he takes is public, dated, losses left in. He teaches rules-based swing trading in 15 minutes a day, one system for any market.

Educational content only, not personalised financial advice. Trading carries risk, including loss of capital. Past performance is not indicative of future results. Synapse Trading is not licensed or regulated by MAS.

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