Updated June 28, 2022 → added link to Bonkalytics

Bottom Line Up Front

Research into a crypto project can generally be broken into three categories: The dev team; the project fundamentals; and the community. This guide will cover tools and techniques for researching each, red flags to look for, and general tips on how to go about learning as much as you can about a project. This is a reference guide that will be updated regularly to include new tools and services available, emerging threats in the space, and timely examples.

Overview

“Do your own research”, or DYOR is perhaps the most common phrase in crypto today. It is used as both advice and as a disclaimer whenever projects are discussed. But for all the influencers and investors that regularly tell people to DYOR, it’s rare that they ever say exactly how. Well, that’s exactly what this guide seeks to do. Researching a crypto project will be broken down into three categories:

• The dev team, including their experience and past projects
• The project itself, including fundamentals and tokenomics
• The community across all social media platforms

For each category, I’ll provide research tips, free and paid online tools that can be used, red flags to look out for, and plenty of examples. This is by no means a definitive or all-inclusive guide, which is why I will treat it like a living document, with regular updates and additions as appropriate.

General Researching Guidelines

• Take nothing at face value - verify all claims made as best you can
• Use other people’s research as a benchmark for your own, not as a replacement
• Learn to differentiate facts from opinions.
• Get facts from known, trusted sources, and gather as many opinions as possible. People believe a wide spectrum of things, and the truth is usually somewhere in the middle of it all.
• Always do your research before investing, not after.
• Research is a skill. Like any other skill, it takes time to learn and practice to get better.

Developers and Core Team

Researching a project’s developers and core team is the heart of KYC. All other research aside, if a team has a history of failed or abandoned projects, or they have pulled several exit scams in the past, then for me there is no need to research further. Finding this information can be tricky, though, and it’s only one of many things you should be looking at.

Keep in mind, you are not likely to find everything you are looking for in one place. Especially when researching a team that is not fully doxed, it is more like putting together a puzzle, with pieces scattered all around the internet. Ultimately, your goal is to learn as much about the team’s experience, history, and motivations as you can. So, where do you start?

• Is anyone on the team fully doxed? If so, check them out on Linkedin, and google their first and last name in quotes (ex: “Elon Musk”, with the quotes included). Look for any other projects they may have been involved with, and any independent verification of their experience (I can say I was a software engineer at Google on my Linkedin profile, but that doesn’t make it true). Be sure to check the News and Videos sections in Google as well. For developers, look for a Github account associated with their name to see what else they’ve built.

• Do a reverse image search on profile pictures or avatars used by the team:
• Google Images
• Bing Images
• TinEye
• Yandex
• PimEyes - facial search, great for helping to confirm a dox
• Baidu - Chinese site primarily focused on China-based content
• Usernames can be searched on sites like NameCheckup and CheckUserNames. These tools will search for the name across hundreds of sites, allowing you to see where else they might be active.
• If any of the team has a personal Twitter account, AllMyTweets will let you see their most recent (up to 5k) tweets and likes, which may yield some interesting or useful info.
• If in doubt about anything, ask the team directly! If they respond, you have more information that you can verify. If they ignore you or push back on answering, ask yourself why. If you’re banned/blocked from a channel or server for asking, then you know you hit an important question, and should keep digging.

Project Foundation, Fundamentals, and Tokenomics

This research involves looking under the hood of a project to understand what makes it run. The smart contract, website, whitepaper, roadmap, and associated wallets can all hold valuable information about the project.

• Check the contract on TokenSniffer, Scamsniper and Honeypot.is. All are free, and will scan a smart contract for common malicious functions that might give owners the ability to rug. TokenSniffer will show you other smart contracts that have similar or identical code, so you can see how those projects faired. These services will also simulate sales to ensure the project is not a honeypot. If the project is still in presale, however, they can throw some false positives.
• Another contract scanning service is Rugscreen. It’s more comprehensive than the other two, but costs a few dollars worth of BNB to run.
• Check the contract and website on ChainAbuse to see if they are connected to any known fraudulent activity.
• For NFT projects, use a tool like Bonkalytics to look at the number of unique minters, total minted, whale mints, total volume, and other useful metrics. Be cautious of projects with a large amount minted by relatively few wallets, as it could be a sign of wash trading or other market manipulation.
• On a block explorer, go to the wallet that created the contract to see where their funds came from, and if they have created any other contracts (be sure to check all chains the wallet is active on). If they have, spend some time looking into those projects as well, at least to see if any were rugged or abandoned.

• Spend time on the website reading everything, and clicking all the links. If there are a lot of spelling or grammatical errors, broken links, non-functioning buttons, or other indications that minimal time has been put into developing the site, that’s a big warning sign. If the contract, roadmap, and whitepaper are not readily accessible on the site (or non-existent), that’s another warning sign. Generally speaking, the less effort that was put into the project as a whole, the bigger the red flag.

• Do an ICANN lookup on the website to see when it was created. Compare this to when a presale was listed, marketing on social media began, etc. Scam projects tend to be a quick flash in the pan - everything happens all at once, usually, within a week or two. Good projects take time to build.

• Take a look at the roadmap, and decide if the milestones, deliverables, and timetables listed seem reasonable, especially given what you know about the team. Scam and pump & dump projects thrive on hype, and that’s often reflected in outlandish roadmaps. Similarly, carefully consider what the project currently has built and deployed, versus what they are promising will come sometime in the future. If the entire value proposition of a project is built on what they say is coming, not what already exists, that’s a warning sign.

• Give equal, if not more scrutiny to the whitepaper. Is it just repeating what’s on the website, or is it going into more detail? Google their mission statement (in quotes) or other generic-sounding parts of the whitepaper to see if they have been copied from other projects. Make sure the tokenomics and project details covered in the whitepaper match what is presented on the website and socials.
• Be aware of the tokenomics, especially buy and sell taxes, and how they would impact the break-even point of your investment. For example:
  • If a project has a 10% buy and sell tax, putting in $1k would get you $900 worth of tokens.
  • You would need to sell $1111 worth of tokens to end up with $1k back in your wallet after the sell tax is taken out (1111 - (0.1 * 1111) = 1000).
  • This means your initial $900 worth of tokens would have to increase in value to $1111 (a ~24% increase) just to break even.
  • A project with 5% buy/sell tax would need ~11% price increase to break even, and a 15% buy/sell tax would take ~38% price increase.
• If the token offers staking, what is the Total Value Locked (TVL) percentage? A low percent may indicate holders are not interested in governance or longevity, and will instead sell when the price rises to their target. Conversely, a high TVL percent can indicate strong community faith in the project.
• Be sure to verify all claims of contract audits and liquidity locks. If an audit has been done, read the report in full. If liquidity has been locked, find out what percentage of the total liquidity it is, how long it’s locked for, and what the team will do with the liquidity once it unlocks.
• On a block explorer, check what percentage of tokens the largest wallet holders have. If one wallet owns 10% or more of the total circulating supply, they could cause a significant price drop if they sold all at once. Keep in mind, the block explorer will show the percent of total tokens owned, not circulating tokens. So, if 50% of the circulating supply has been burned, then the actual percentage owned by each wallet will be double what is shown.

Community and Social Media

No project can moon without everyone in the community helping to gas up the rocket. Communities can make or break a project, so you want to make sure you know as much about them as possible.

• Check a project’s Twitter account on SparkToro and TwitterAudit to get an idea of how many fake, botted, or inactive followers they have. If the account has used giveaways to gain followers, chances are they will have a lot. Followers gained by giveaways do not mean followers that are invested (or even interested) in the project.
• Compare the number of followers or subscribers on each of the social media channels. Generally, Twitter and Telegram will be about equal, and Discord will be slightly lower. If there is a large discrepancy between platforms - say, if Telegram has 7k more followers than Twitter - it could indicate they artificially inflated their followers with fake accounts.
• Do their Telegram and Discord channels have any helper bots set up (Rose, MEE6, WickBot, etc), or is moderating and sending official links completely manual? As with the roadmap, whitepaper, and website, the less effort that is put into a project, the bigger the red flag.
• Spend some time chatting on each of the platforms. Are there active conversations from a large number of members, or just a regular stream of “wen lambo” memes? What how much engagement do tweets from the official account get? How active are the devs and core team on each of the socials? Are questions about the project answered, mocked, or ignored? Do community members seem genuinely excited about the project and supportive of the core team?
• Search account handles and project-related hashtags on Twitter, and get an idea of what people are saying about it. Is there a lot of organic chatter from a bunch of different accounts, or are there only a few cheerleaders/influencers driving everything? What’s the overall sentiment when people talk about the project? Look at comments under tweets from the main account, as they are often from holders. Are they supportive of the project and team, or angry?

The Takeaway

With few exceptions, no one source or piece of information will give you the full picture of a project and its team. Instead, you must piece together a mosaic using a wide variety of information, both qualitative and quantitative, and make your assessment from there based on your own risk tolerance. As a general rule of thumb, the amount of time you spend researching a project should be proportional to the amount of money you plan to invest in it.

Have a question, comment, tip, inside info, or anything else? Email KnowYourCrook@ProtonMail.com