It’s a staple used by many analysts, influencers, and shills across the whole cryptocurrency industry. DYOR. Do Your Own Research. (Note: you’ll often find this preceded by the classic disclaimer This is not financial advice).
Yet crypto, at first glance, can seem infinitely and overwhelmingly complex. And it’s not getting any simpler. Every day, new tokens are released, new integrations are announced, and new money enters the space, seeking a direction.
How can recent or prospective entrants to crypto do the research that is needed for a working knowledge of this ever-evolving space? The information is out there but it’s not always as accessible as it could be.
Investing in crypto without at least a basic knowledge of the tech and the problems to which projects are offering solutions is like flying blind. Responsible investing requires an understanding of the risk you’re taking.
You’re much more likely to fall victim to a scam or rugpull (noun: the act of suddenly and surprisingly stealing all the money invested in a DeFi platform, usually perpetrated by a developer or other trusted party) if your research hasn’t prepared you for the possibility and the signs to keep watch for.
DYOR in Crypto: the Basics
Many crypto-focused publications have sprung up over the last decade with the goal of informing and educating users. In addition to covering breaking news and market updates, many publications also offer informational guides and walkthroughs on their sites.
Crypto exchanges are another great resource for those looking to understand beginner-to-intermediate concepts. The exchanges, of course, have a significant incentive to spread the knowledge that makes people want to hit the big green Buy button.
For example, Coinbase Earn rewards users with cryptocurrency for watching educational videos on different tokens and correctly answering the quizzes that follow.
Kraken takes a different approach. Kraken Learn is more of an encyclopedic resource, with introductory topics such as What is Bitcoin? and What is Blockchain Technology? as well as more intermediate topics like What is DeFi? and Proof of Work vs Proof of Stake.
These articles and videos are a great way to learn about many introductory concepts in crypto.
There are also thousands of videos on YouTube where you can have just about any crypto-related topic explained by experts in the field. These target all levels of technical knowledge, so you can find videos that ELI5 (explain like I’m five) all the way up to extremely detailed breakdowns of the complicated concepts behind Bitcoin and blockchain.
Once you’ve grasped the fundamentals and have a working knowledge of how some key ideas tie together, you might want to deepen your technical understanding in order to feel more comfortable in your investments.
Luckily, there are some great resources out there for those at an intermediate level in the crypto field.
One good way to expand your understanding while potentially finding new projects to invest in is to read their whitepapers. All reputable projects should release a whitepaper – a document which aims to explain the problem the project addresses, challenges that may arise, and the product-market fit. There’s no better way to learn about the promise (or not) of a new project while brushing up on your technical knowledge.
At this point, you may be running into some unfamiliar terms. Merkle trees, oracles, impermanent loss.
The Bitcoin Wiki is a great resource for any and all Bitcoin-related terms. You can also find guides on setting up a wallet, exchange reviews, and articles on the fascinating history of Bitcoin.
For DeFi-related terms, you might have to dig a little deeper. Decentralized finance is still in its very early days, so there aren’t as many established resources as there are for Bitcoin. Yet an increasing number of the platforms where you can learn the basics are also adding DeFi-specific guides and explainers.
Of course, not everyone is a developer or can bring themselves to be interested in the technical side of things. But if you’re hoping to get a positive return on the money you invest, it’s important to feel comfortable with the security of the platform you’re putting it into.
So, if you can’t read smart contract code, who do you trust to verify the security of a project? CertiK is a premiere blockchain auditing firm with a complete suite of end-to-end security solutions. Since 2017, CertiK has audited hundreds of crypto and DeFi projects.
In the interest of transparency and open-sourced knowledge, we’ve created a powerful but easily accessible dashboard and scoring system for all your security research needs.
The Security Leaderboard is a one stop shop for all your DeFi security research needs. DeFi users can leverage the expertise of our auditing and security teams to equip themselves with a deeper knowledge of security risks. These users push the whole ecosystem to new heights, while we provide the data that helps them make informed decisions.
Getting Ready to Invest
Once you understand the problem a project is trying to solve and you’ve checked that they’ve been audited on the Security Leaderboard, it’s time to dig a bit deeper before committing your funds.
If a project has a native token, it’s definitely worth understanding the economics of that token: its tokenomics. Find out what the total supply of the token is, if this number has a hard-limit, what proportion of tokens are currently in circulation, and what the plan is for the release of the rest. This data will help you get a better idea of what the future value of the token may be.
It’s also worth looking into the team behind the project you’re looking at investing in. Have they worked on other products in the past? Are they established in the crypto-scene, or are they newcomers?
This sort of information for some of the newest and most innovative DeFi projects may be harder to find. That doesn’t mean the product isn’t as good as what a more established team might offer, but it might mean you require a higher level of trustlessness and security in lieu of the good reputation of the team.
In such a rapidly-changing industry, it’s important to know where you’re putting your money. Understanding blockchain technology and the product-market fit of your chosen projects will help you know where your money’s going today, while looking into the team, tokenomics, and security of the project will give you an idea of where your money will be tomorrow.
- If you’re brand new to crypto, start by understanding Bitcoin and blockchain technology. This will give you a solid foundation which will help you understand the projects that have come since Bitcoin’s launch.
- Next, start reading the whitepapers of projects that catch your interest. Look up definitions for any terms you don’t understand and try to assess the merits of the problem that the team is trying to solve.
- Once you’ve identified a project with a good product-market fit, head over to the Security Leaderboard for a comprehensive view of its auditing history and on-chain monitoring data.
- If it meets your personal risk:reward tolerance, take a look at the project’s tokenomics and the team behind it. This will help you understand the history of the people working on it and the future of the token you want to invest in.
If you find a project that meets these criteria, congratulations, hopefully you’ve picked a winner!
Doing your own research can be a complicated process, but it’s an absolute must for any diligent crypto investor. Luckily, there are plenty of resources out there to help you make informed decisions.