How to DYOR (Do Your Own Research) on Cryptocurrency Projects

In Web3, not everyone has good intentions. But that is not entirely a bad thing—because there is a huge amount of publicly available information you can use to do your own research. Most crypto projects have their own whitepapers, Discord channels, and of course, blockchain explorers like Etherscan that provide detailed insights into their underlying smart contracts.

Web3 may be highly attractive to scammers, but at the same time, it also gives you the tools to distinguish between what is real and what is not, and to verify information for yourself. This article introduces the key resources you can use to do exactly that.

Let’s start with the basics of blockchain. Every crypto project, token, or platform is built on smart contracts. Since smart contracts operate on the blockchain, all of their important data is recorded on-chain and made publicly available for anyone to review.

You may be wondering how to access that data—and that is where blockchain explorers such as Etherscan come in. A blockchain explorer is a bit like a search engine built specifically for blockchain networks. It can process vast amounts of on-chain data from a given blockchain and show you a wide range of results related to the project you are researching.

By checking several key metrics on blockchain explorers like Etherscan, you can often form a fairly clear view of a project. These metrics include:

Contract creation date:
This shows when the project’s underlying smart contract was created, which helps you understand how long the project has been around. This can be useful when identifying potentially risky or unreliable projects, since such projects often have a short lifespan.

Total token supply:
Reviewing a project’s total token supply gives you a broader understanding of the token economy and how much of the supply is actually available. Buying one thousand tokens may sound significant, but if the total supply is fifty million, you can quickly see how small your share of the project really is.

Token distribution:
Looking at how tokens are distributed can also reveal important details. A supply of fifty million tokens may seem reasonable, but if ten million of them are concentrated in a single wallet, that could be a warning sign. It may suggest instability or even manipulation, because one holder has too much influence over the project.

Wallet transaction history:
By examining a project’s smart contract data, you can also review its transaction history and the wallet addresses interacting with it. If a large number of transactions are simply circulating among a small number of wallets, this may indicate fake trading activity designed to inflate the project’s price or reputation. Likewise, if a token claims to have a large supply but shows only a very limited and recent transaction history, it may suggest the smart contract is not trustworthy. In either case, checking Etherscan can help you better understand how the project actually operates behind the scenes.

Before you can analyze this data, you first need to find the project’s smart contract address. This address may appear on the project’s official website, OpenSea page, whitepaper, or even its GitHub page. It may also be listed on CoinMarketCap or CoinGecko.

Once you copy the address, go to a blockchain explorer that supports the project’s underlying chain and paste in the smart contract address. You will then be able to access all of the metrics mentioned above, along with additional data that can help you better assess the project.

Discord originally started as a social platform for gamers and developers, but it has since become one of the core communication hubs in the Web3 world. Nearly every crypto project has its own Discord server, which serves as a central place for community questions, collaboration, and sharing early-stage developments.

At a deeper level, Discord is a repository of information where you can get a sense of a project’s community atmosphere and even gain insight into its founders.

For example, if you have questions about a project’s future or technical design, Discord is often a good place to ask them. A responsive team that is willing to address concerns and answer questions is usually what you would expect from a legitimate project and responsible founders. On the other hand, if questions go unanswered or the core team refuses to engage, that may indicate a lack of vision—or worse, a scam.

Reading community discussions can also tell you a lot about a project. If most of the comments are purely promotional or aggressively pushing people to buy quickly, the project may not be as genuine as it appears. Discord is supposed to be about building a real community, not just creating hype.

At the same time, you can evaluate how the community feels about the project overall—whether members are actively engaged, feeling disappointed, or sharing important upcoming developments.

Overall, checking the activity and conversations on Discord is another valuable way to gather information about a project, and it should absolutely be part of your research process.

A third essential research resource is the whitepaper. In Web3, most projects publish a whitepaper that outlines the underlying technology, specific use cases if any, the future roadmap, and the founding team. All of this information can help you determine whether the project has a realistic and promising future.

First, you should examine the project’s use case. Does it apply to real businesses or industries? Who are its competitors? Does the project truly need to be built on blockchain? If these questions do not have clear answers, you may need to reconsider whether the project’s real-world value can withstand the hype.

Whitepapers usually identify the founding team, which can provide valuable information. If the founders have a strong track record in DeFi or NFTs, that can make the project more appealing. On the other hand, if the founders are anonymous or lack a credible background in crypto, business, or the project’s core application area, you may want to do much deeper research before making any investment decision.

Finally, every solid whitepaper should include a roadmap that explains how the founders plan to develop the project in the future. This gives you a chance to understand their intentions and decide whether their plans are actually realistic before choosing to get involved.