Yet Another HOW-TO DYOR: Checklist Before Making Investments in Crypto Products

I thought this would be useful for newcomers. Not all of them apply to everything, and failing a few of them would be fine as long as the risk is understood. Of course, there are shitcoins and scams that sometimes manage to fulfill everything, and even good projects sometimes don't work out so as always, spread the risk by not putting all your eggs in a basket.

This includes currencies/tokens, defi products, staking, and even investment products on exchanges.

I would appreciate it if others could comment if anything is missing. Of course, I wish this would live in a wiki that everyone could add to it, but right now, I don't have better ideas where to publish it.

• Check how the project is useful and what value does it provide. Go through the documentation and whitepaper. You should be looking for things that creating value or have a utility, so there would be a continuous and growing demand for the project. If you don't understand, you can always ask them, and it would be a great chance to see how is their support.
• If the project is live check the current metrics of how much of the token is used/locked/burned. Check to see how it is different from other implementations that solve the same problem if that applies.
• Check to see if they have open-sourced their code. Check to see how frequently they make changes to the code repositories. Nothing is ever finished, and there's always room for improvement.
• If the project is just a currency with a promise of delivering value for the future, check to see if they have a testnet and try to see what's done and what's not. You can ask their devs for the current status.
• Check to see which companies backing the project. Google them with the company name to see if you can find some news from the companies. Projects with big investors behind them means someone else did this research and found out it was good.
• Check to see the team behind the project. Find out what did they work on before this. You can check their Linkedin.
• If it's a currency, check the current supply for it. Check what's the emission or burn schedule if any. Find out to see how much of it is allocated to what. If there's a constant emission, check if people are locking it in constantly(for example one reason Ethereum value rise even though there's a constant emission is because people lock it in DeFI apps)
• Via the blockexplorer you can find which addresses have the highest amount and you can ask the team about it. You want to make sure if the team decided to raise money and cash out their holdings, it wouldn't tank the coin causing everyone to panic and sell.
• Check the current and future market cap and compare it to other projects. If it's too high, expect the value to fall.
• If it's a token mainly for governance(to vote on proposals), compare the market cap/TVL ratio(you can find it on coingecko) with other governance tokens. The higher the ratio, the more of the token is held by speculators who are not gonna use it to vote and simply cash out when the value is high enough. You want to the value to be driven out of utility and not out of speculators.
• If you are investing in a DEFI product and the project has a governance token, find out how much one would need to buy the governance token and use that to vote in proposals that would not be in your interest. Check earlier proposals and see how much was voted. It should be too expensive to buy enough of the token and change the outcome of proposals. Check to see previous proposals and how much people voted. You can compare this usage with other similar projects for more insights. A governance token is useless if there's no proposals or if people aren't interested to vote in proposals.
• Find out the attack vectors of the projects. If it's a proof of stake currency, how much one needs to do successful attacks. Or if it's proof of work check to see how much resources an adversary needs for a successful attack.
• Check to see if the project/exchange is audited and which third-party audited them.
• Check to see if there has been (attempted) attacks/hacks on the project/exchange. See they have reacted and how did it survive the hack. Good examples are doing more audits, covering users losses, plugging the holes immediately, providing updates(Binance). Bad examples are locking withdrawals for extended periods of time and doing shady things(Kucoin).
• Check the project roadmap, see if the the stuff on the roadmap(short-term and long-term) make sense and provide value and utility.
• Check their old roadmaps and see how did they achieve their goals. It's normal though, for projects to overestimate their ability and not deliver on time, but it definitely shouldn't be that they didn't deliver anything at all.
• Check their social media, not just the ones that the project advertises, also find the ones the community around them has created. I normally find good non-official groups on Telegram. Look to see what people are complaining about. Look to see if the traders are holding or looking for short term profits.
• Check to see how the project evolved, how that changed their trading volumes/usage/social media following.
• At least make a rough investment plan, which should include how much and how frequently you would be investing, for how long, when you would take profits and what are the costs are. Don't forget gas costs for both supplying and withdrawing for DEFI projects. For most investment products(exchange or DEFI) the APY is not constant and things with high APY don't last long. Find out how do they change, what affects them and when do they end. Calculate how much would be your true return.
• In the case that you have to your lock your tokens for a certain amount of time, check to see how much is a penalty for early withdrawal and check if you can short the token to hedge the risk if you couldn't withdraw.
• If it's a token, check to see which centralized exchanges you can buy it from. Normally big centralized exchanges would do some research before listing(not Hotbit) to make sure the coin is not a scam.

Previous DYOR research topics:
– https://www.reddit.com/r/CryptoCurrency/comments/llehit/everyone_talks_about_dyor_how_to_dyor/
–https://www.reddit.com/r/CryptoCurrency/comments/lz1taw/a_beginners_guide_to_dyor_do_your_own_research/
– https://www.reddit.com/r/CryptoCurrency/comments/lw80l9/a_guide_on_how_to_dyor_do_your_own_research_in_an/
–https://www.reddit.com/r/CryptoCurrency/comments/m2x47o/the_best_pages_to_do_your_crypto_research_dyor/

– https://www.reddit.com/r/CryptoCurrency/comments/lggz82/for_new_investors_dyor_101/