Good & bad practices in the blockchain multiverse: Chapter 1. Research
“Crypto- or Blockchain-multiverse” is born from an elegant combination of fundamental ideas and cutting-edge technologies to usher our civilization into a new era of digital space.
One can also describe it as an interdisciplinary industry in the digital space created using cryptography, decentralised ledgers, financial instruments, and art. In simple terms, a multiverse consists of cryptocurrencies, smart contracts, blockchains, and digital assets.
The crypto multiverse is increasingly gaining interest and due to its nature, quite easily accessible to everyone who uses the internet. New projects are released almost every single day with something new to add to the space, like tiny puzzle pieces which would eventually become paradigm-shifting innovations. Albeit exciting, there are dark and scary aspects lurking in the multiverse which can be extremely harmful to users, especially those who are new to the space. The life-changing moments can quickly become negative if users are not alert and aware of malicious actors and their practices.
The following article is the first of a few wherein we will discuss common good and bad practices of the blockchain multiverse. The points mentioned touch most of the aspects any user encounters when interacting with this space with references for further research. It is not just one rabbit hole but a whole network of parallel digital universes that one has to explore. Survival in space is the key and thus you need to make sure you have a proper, well-thought-out strategy going forward.
A few articles will be published over a few weeks which discuss different topics. The following list is some of the topics we will be covering. This is subject to change and likely has more content/subtopics which will be updated retroactively. At the end of this series, a summary article with links will be published for ease of navigation.
Topics:
- Research (covered in this article)
- DYOR (do your own research) practice
- Smart Contract verification practice
- Cryptocurrency wallet practice
- The web3 (MetaMask, etc.) practice
3. Trading
- Why the ‘trading’ topic?
- P2P, Marketplace, FOMO, Risk management
- Social platform practice
Disclaimer: This article is written with an intent to help new gamers entering the blockchain space grasp general ideas about research which are a cornerstone of games in this industry. The article is not written to provide any sort of financial advice/tip/trick or tool.
DYOR (do your own research) practice
Every single day several projects are launched in this permissionless ecosystem. Most of them are essentially duplicates with slight modifications. It goes without saying that every team will be inherently biased towards their project and only ever display the advantages. No one can have a completely unbiased & objective outlook for their own projects. Even the team of BlockRaiders, authors of this article, will be biased towards their guild for that matter, human nature after all. Furthermore, even the communities in the blockchain space are asymmetrically biased to the projects they are invested in compared to another which could be exactly the same in terms of mechanics which is a result of exclusivity & marketing practice. This is where ‘DYOR’ comes in. As the number of blockchains continuously grows, the tokens and coins population will proliferate as well. It is increasingly important to assess and evaluate coins and projects for the best investment.
Do Your Own Research (DYOR) is a popular term within the cryptocurrency, blockchain world. It’s a gentle reminder to acquire knowledge that helps in decision-making for investments. Having a solid understanding of the projects you invest time and money in can most of the time result in a positive outcome.
But how to do your own research?
As the blockchain space is relatively new in the internet era, there’s no standard release format for any project, however, several key metrics are important to note.
1. Checking the project on public platforms/aggregators
Certain platforms collect information about projects, process them and display it on a user-friendly website. The data is curated for the official links to the project and its resources. It is good to know that projects are not automatically listed as soon as released but have to be applied. Some to go websites to research coins are:
- https://www.coingecko.com/
- https://coinmarketcap.com/
- https://cryptoslate.com/coins/
2. Checking the official website and related resources
Every decent project will have a website in this era. The interface (appearance & feel) should be a good first impression test for the project. Go through pages to learn more about the project and try to find the unique selling points which hopefully are not vague. Check for the usage of generic stock images and off-the-shelf graphics by searching for them on google image search. Never connect your web3 interface wallet like MetaMask right off the bat.
When in doubt, ask about it in other communities in the space, this could be your friends, your guild, common discussion forums such as discord, telegram groups, etc. Googles searches are fine, however, many websites including the ‘ads’ can be unofficial and lead to scams hence it is best to go via official channels and then bookmark the official websites. The next time you visit the website, you can see it being in your bookmark in the browser and if it isn’t then you might be visiting a fake.
Apart from the official website, make sure to check other content publication platforms such as Medium, Youtube, Twitch, Github, etc. Many times Medium itself is used as the official blog for the project and information is only posted there.
3. Checking the social media & community engagement platforms
When you come across your new project or token of interest, always check the project’s social media accounts. The most common ones are Twitter, Facebook, Reddit, LinkedIn.
The community activity of the project’s social media group is a relatively good test for the legitimacy of a project. Again, be aware, and watch out for hype and hysteria. Beware of fake social media accounts and accounts loaded with bot followers. Social Media is notorious for being rampant with fictitious accounts intended to scam users.
The most prominent community engagement platforms are discord server, Twitter and telegram channels. Almost every project announces news, updates and relevant sources via these three platforms. A trick to learn more about ins and outs of a project is to search it on ‘Twitter search’ and look for critics. Many skilled individuals analyse the projects, its company, team, tokenomics, etc. and write about its pros and cons on their Twitter profile.
4. Checking the company and the team
There are faces behind every project. When reviewing the background information of a project, it is essential to get to know the team and developers behind it. Possibly check them on Linkedin. Find their professional profile or website. Have they worked in this space before? Perhaps with technology ventures? General information about the company, its registration and team with links can be found on either the website of the project or its main community platform like discord server. There are other websites such as CrunchBase that lists registered companies with more information.
It’s also relevant to check partnerships and any entity that may have backed the project. Associations with other prominent projects backed by investors are often a good sign to know that a crypto project will be legitimate. This also goes the other way, having associations with investors which have been part of previous other money-grab projects is a bad sign.
Finally in the end, if you are not 100% convinced about the legitimacy of the project and its team, avoid investing. When in doubt because of some reason, never invest time or money which you cannot afford to lose. Always remember that projects can fail, not because it was a scam but because there was no market demand. As long as the team puts genuine effort into realising their vision, there is hope.
Blockchain verification practice (Tokens & Smart Contracts for DEX trades)
One of the most fundamental advantages of blockchain-based technology is the publicly verifiable ledger for its transactions, tokens and smart contracts. The ecosystem contains platform blockchain such as Ethereum, Polygon, Avalanche, Binance Smart Chain, Terra, Solana, Cosmos, Polkadot to name a few upon which smart contracts are deployed by projects to utilize its functions along with their specifics tokens. All of the smart contracts deployed on public ledgers/blockchain can be verified right till the code. Since the inception of DEXs (decentralized exchanges), theoretically, anyone can deploy a smart contract, add liquidity and start a trading pair. This opens opportunities for scammers to imitate tokens.
There are several verifications that can be performed even if you do not understand the code itself. First and foremost, a decent project will have the official contract/token address published on several different platforms for the purpose of verification. If one of the platforms is compromised, people can compare and verify it from other sources. e.g. If discord is compromised and an admin account posts a new token contract all of a sudden, then people can compare it with say the address posted on the website and the blockchain explorer.
For example, to check a smart contract/token on Ethereum, visit https://etherscan.io/ and paste the address in the search bar OR search the token/project by name. Check the token, creator, etc. The next check is websites that display the trading information such as https://dex.guru/. Paste the address to see if the correct token shows up along with its trade volume, liquidity, etc.
Thus it is a good practice to first check the contract address on blockchain explorers and another public website before making a trade on a decentralized exchange.
Tip: In the case that a new project is launched and you want to trade it or claim tokens or related interaction but are unsure about its safety then you can do two things: 1. Search about it in ‘Twitter search’ and look for people who have reviewed the code. 2. Go to https://rugdoc.io/ (a few more out there) and search for the project. This will help avoid some obvious scams which might seem legit from the outside.
To summarize, a good practice is to DYOR and verify smart contracts/token/code even if your favorite influencer/friend/fellow community member shills a project while bad practice is to blindly trust a project based on its outlook and invest more than you can afford to lose.
Hopefully, with this knowledge, you can be ever more alert and avoid the pitfalls of the multiverse. Next week’s topic will be ‘Wallet management’.
And that about covers everything. We hope this article has given you more insights into the crypto world, and if there are any questions, don’t hesitate to join our Discord community and fire away!
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