How to do your own research (DYOR)?
When it comes to cryptocurrency, there is arguably nothing more important than doing your own research. This is easier said than done, who has the time to do their due diligence with any given crypto project? After all, there is a lot of information out there and it can be hard to figure out what’s real and what’s fake. However, if you’re serious about your cryptocurrency aspirations, you are going to need to learn how to do your own research.
The research will help you figure out which cryptocurrencies to buy and which ones to stay away from. It will make it easier to figure out when to buy and when to sell those cryptocurrencies and it will even help you educate your friends and family about this magic internet money. If you do enough research, you might even find yourself working full-time in the cryptocurrency space just like me. No further ado, let’s get into it.
Market activity
The first step in doing your own cryptocurrency research is figuring out whether the crypto you’re interested in is economically active. I can’t tell you the number of times that I’ve come across a promising cryptocurrency project only to check its market activity and see that the coin has been dead for months or even years.
As such, when you hear about a promising cryptocurrency that peaks your interest, the first thing you need to do is go to a website like CoinMarketCap or CoinGecko to see if it’s alive. In most cases, CoinMarketCap and CoinGecko will be how you find out about that cryptocurrency to begin with. If this is the case, be sure to check the trading volume and price action you’re seeing is genuine.
Not only should that token be listed on at least one reputable exchange, the trading volume on that exchange should also be significant. If it isn’t, you could find yourself paying a premium since the order books may not be as deep. If the crypto you’re looking at is an erc20 token that’s being traded almost exclusively on a Dex like Uniswap, be sure to proceed with caution, as Dexes do not exactly have any listing criteria or requirements. This certainly does not write off a project but it is something to keep in mind going forward.
Also, keep in mind that the price of a cryptocurrency and even its recent price action is not a good enough reason for you to abandon the ship with few exceptions. Once you’ve established the crypto you fancy has an economic pulse, it’s time to get a sense of what it is and how it works.
Initial research
When it comes to wrapping your head around a new cryptocurrency, Youtube is a good place to start. The problem is that you’re probably going to find yourself skipping through videos of people reading off of website home pages and doing piss-poor technical analysis. That’s why you should also pay a visit to Messari, Binance Research, and an ICO tracking site like ICO Drops.
When you use these resources, be sure to take notes and write down any questions you might have. You aren’t trying to get answers yet, you’re just trying to get a primer.
Messari
Now, I’ve mentioned Messari before as being a powerful tool you can use to analyze cryptocurrencies. In this case, what you’re looking for on Messari is the profile section of the cryptocurrency you’re interested in. Let’s visit the Matic coin profile as an example.
Here, you’ll often find a thoroughly comprehensive breakdown including the history of the cryptocurrency, incredibly detailed tokenomics, token allocations, and even a timeline of the project’s past and future development and funding milestones.
Be sure to jot down the names of any key individuals involved in the project, namely the founder and CEO, assuming they’re not the same person. You’re going to need this later.
Binance research
In contrast to Messari, Binance research often takes a more technical approach to analyze any given token. This is useful in understanding the core components of the cryptocurrency you’re interested in and how they work. The great thing about Messari and Binance research is that because they’re big players in the space, there is a degree of professionalism that’s expected from them. In other words, they have to do a good job and get everything right or else fans of the cryptocurrencies they’re writing about will launch an attack and they could even see some more severe retaliation from the crypto project itself.
The only issue is that the information on Messari and Binance research is usually a bit outdated. You can’t blame them, considering writing hot off the press crypto content isn’t exactly their main goal. This is why you shouldn’t take anything written by a third party as the be-all and end-all of your research, even if that source is reputable.
ICO drops
ICO tracking sites like ICO drops are sort of like time machines, in that they often source old images and documentation that’s no longer available on the website of the cryptocurrency you’re investigating. This makes it easy to spot whether a cryptocurrency project has changed its course or if it’s simply trying to bury the past.
Unfortunately, the total amount of money raised that’s reported by ICO drops and similar sites is not always accurate and tends to include any funds that were raised in private funding rounds, or across multiple ICOs held by the project.
As such, you should always check and see if they provided any images that can give you a better breakdown of how money was raised and where tokens were allocated.
Messari does a good job of tracking this, so you can compare and contrast Messari data with what’s on ICO drops to clarify exactly how a given crypto project raised its capital.
What you’re looking for here is a token allocation that doesn’t make you want to run for the hills. Specifically, you want to make sure that most of the tokens that have been issued or will be issued are in the hands of the community and not in the pockets of the people who founded the project. This is because they could potentially sell those tokens when the price starts to rise, which would prevent the coin from going as high as it otherwise could.
From the source
Now that you have a good grasp of the new cryptocurrency you’re interested in, you’ll need to hear it all from the horse’s mouth. Since you remembered to write down the names of the key individuals involved in the project, your next task will be to find the most recent interviews they’ve done that are up on Youtube. I recommend arranging them in chronological order before watching them.
I found that watching interviews with key members of cryptocurrency projects offers a treasure trove of information that you won’t find anywhere else. Moreover, these interviews often go a long way toward helping me wrap my head around any technical elements of a project that I could struggle to understand by just reading their documentation.
Chances are the things you hear during these interviews will answer most of the questions you might have had about the cryptocurrency when you read about it on Messari and Binance research. Watching the brains behind a project in action will also give you a sense of whether you’re dealing with the next best thing, or with fool’s gold.
Pro tip: check the LinkedIn profiles to see if their credentials have any merit. X Google or Microsoft doesn’t mean anything if they work there for a few months and they were fired for being drunk on the job or some other lame behavior.
Double-checking
How many times have you gone to the website of a cryptocurrency you’re researching only to feel overwhelmed by the information being offered? I reckon it’s a big part of why most people just read the home page and the about section and call it a day. Unfortunately, most of the information on a given cryptocurrencies website tends to be platitude upon platitude about banking the unbanked or some other noble cause they claim to champion.
To be blunt, most of the content on a cryptocurrency’s website is useless and isn’t going to help you figure out if the project is worth your attention. You’re going to waste a lot of time poking around through their site if you don’t know what you’re looking for. But, since you remembered to write down the key components of how this crypto works and any questions you might have about it, your next mission is to go through and check that everything you learned still applies and solve any mysteries that might have arisen since you started your research.
Most of this can easily be done by digging through the cryptocurrency’s dedicated documentation. If you’re lucky, you’ll have a friendly search bar where you can just throw in key terms like tokenomics, inflation, ICO, consensus mechanisms, mining, staking, and any other topics that you feel you still need clarification on.
Otherwise, you’ll have to search through the documents manually. Since cryptocurrency documentation is usually geared towards developers, many of the pages you pull out will contain some lines of computer code. Now, this might seem intimidating, but more often than not, you’ll find that a simple explanation of what’s going on is put at or near the beginning of the page in layman’s terms.
If you’re still having trouble finding answers about tokenomics, try and dig up the white paper. Find the tokenomics section and see if this provides any additional insight. If it doesn’t, try and find a blockchain explorer for that cryptocurrency. If it’s an erc20 token, I recommend using Etherscan. Here you can quickly check who the largest token holders are and you can even see the token distribution in a pie chart.
Again, be on the lookout for any wallets that are holding a substantial amount of the token, and remember that the largest wallets you see will sometimes be smart contracts used for things like staking.
If your cryptocurrency of choice isn’t an erc20 token, hopefully, the blockchain explorer for it will also let you see the rich list of token holders. If not, consider that a red flag.
Now that you’ve hammered out any kinks in your understanding of the cryptocurrency, the last thing you need to do is see if there are any important updates to the project that might be coming or have already happened.
News and roadmap
For the last part of your cryptocurrency research, you are going to need three things: a roadmap, a blog, and the news. And in this order, because what you see in the news about a cryptocurrency is normally just a summary of what’s been written on their blog. Note that these news articles can come in handy if the blog post they reference is too lengthy or complicated to digest.
About the roadmap, from my experience, cryptocurrency roadmaps tend to be vague and do not usually provide too much information. You’ll probably come to find that watching interviews with founders and CEOs will provide much more information about the future of a project than its roadmap. If you’re lucky, you’ll find a roadmap that contains realistic goals that can be achieved before the project runs out of funding, or gets wrecked by its competition. If you’re unlucky, you’ll get no roadmap at all and if the interviews you’ve watched don’t give you a sense that the project is going to be around for very long, you might be looking at a short-term investment.
The future isn’t all that matters though. You need to make sure that a project has delivered what it has promised so far. This is where the blog comes in. If you’re having trouble finding a blog on a cryptocurrency’s website, chances are you’ll find it on their medium page, like here with me! But sometimes, you have to go as far as their GitHub to see their progress and that’s when you should ask yourself if the project is walking on thin ice.
Skimming through the headlines of a cryptocurrency project’s blog is usually more than enough to get a sense of whether it’s been true to its word and where it’s headed. It’s a good idea to read any updates you see that are significant, such as changes in tokenomics, or any big partnership announcements.
Finally, pop open cryptocurrency news sites like Cointelegraph, CoinDesk, and Decrypt and search to see whether what your promising project is up to has made the headlines. If you don’t find anything, don’t take that as a bad sign, as with the mainstream media, the crypto media has its own way of doing things and it doesn’t always shed light on the topics that need to be seen.
Conclusion
By this point, you should have all the information you need to make a good judgment on whether a cryptocurrency is worth it or not. If you don’t, then you’re probably dealing with a crypto project that you need to be very careful with, or even stay away from. I hate to say it, but this could also mean that you’ll have to go back and look closer at the resources you used in your research. I know that doing your own cryptocurrency research can be a lot of work, but ask yourself this: are a few hours of research worth making for a great return on your investment? Yes, they are!
If you have any other questions about DYOR, please stop by the KogeFarm Telegram or Discord communities, where you’ll always find someone willing to help you out.
