How To Do Crypto Research: The 11-Step DYOR Framework

Crypto prices can double in months and crash just as fast. With new tokens launching weekly and scams constantly evolving, investors need a simple, repeatable crypto research process, rather than social media hype or unverified tips. 

This guide walks through an 11-step DYOR (Do Your Own Research) framework you can reuse to determine what to look for, what to ignore, and which red flags should stop you from investing. 

1. Start with the Basics: What Does This Project Actually Do?

Before looking at charts, ask: What problem does this project solve? 

Go through the website and documentation and ask whether the explanations describe a feasible solution or is it just a collection of buzzwords about “redefining” or “revolutionizing” the industry. 

Then read the whitepaper or litepaper with the same mindset: does it walk you through how the system works, how users interact with it, and how the token fits in, or does it mainly talk up price potential and “community”? 

Finally, look for something live: an app, protocol, testnet, or at least a functional demo that real users can touch. If a project has been around for a year or two and still has no usable product, that’s a serious warning sign.

Regulators and academic studies repeatedly note that many collapsed or fraudulent crypto schemes never had a real, functioning product behind the marketing. They sold a story, not a service. Treat that as your first filter. 

If you can’t explain in one clear sentence what the project does and for whom, you don’t understand it well enough to risk your money—no matter how good the chart looks.

2. Understand the Token’s Role (Utility)

Once you know what the project does, shift your crypto research to why the token needs to exist at all. Strong designs give the token a clear job within the ecosystem, not just a ticker to speculate on. 

You’re looking for direct, practical reasons users must hold, spend, lock, or earn the token for the protocol to function as intended. If the project can run perfectly well using only stablecoins or fiat, the token is probably just a fundraising or rewards wrapper rather than a core part of the product.

Common roles include:

• Payment / gas – Used to pay network fees, protocol fees, or in-app purchases.
• Access – Holding or staking unlocks features, limits, discounts, or higher service tiers.
• Work / security – Validators, node operators, or liquidity providers (LPs) earn it for providing genuine services such as security, data, or liquidity.
• Governance – Gives voting power over protocol parameters, treasury spending, or upgrades.
• Collateral / DeFi – Used as collateral in lending markets, liquidity pools, derivatives platforms, or restaking systems.

As you review the whitepaper and docs, keep a short checklist of questions in front of you. These help you separate meaningful utility from “token as points”:

• Can the system run just fine without this token (for example, using only stablecoins)?
• Do users need to hold or use it for core features, or is it basically “points with a logo”?
• Are there real sinks—fees, burns, lockups, staked positions—or only endless emissions and rewards?

If, after this review, you realise the token could be replaced with USDT or another coin, its long-term investment case is weak. A token that exists mainly to raise money and hand out rewards is much less likely to hold value once the initial hype and yield incentives fade.

3. Check Supply, Emissions, and Unlocks (Tokenomics)

Utility tells you why a token might matter. Tokenomics tells you how much supply can impact your holdings through dilution or sell pressure. A major part of crypto research is understanding how many tokens exist, who holds them, and how fast new ones hit the market—that’s where dilution, sell pressure, and “slow rugs” usually hide.

You always start with total supply and max supply:

• Is there a hard cap, or can supply inflate forever?
• A fixed max supply can support scarcity if demand grows.
• Uncapped or high-inflation designs slowly dilute you unless real usage and fees grow faster than new issuance.

Next, compare circulating supply vs total supply:

• If only 5–10% is circulating and 90–95% is locked (team, investors, “ecosystem funds”), expect strong sell pressure as unlocks hit.
• A tiny float with a huge locked reserve can make early price action look great, then grind down month after month as more tokens enter the market.

Then study allocation—who actually owns the supply:

• Break down: founding team, early investors, treasury/foundation, community incentives, ecosystem growth.
• If insiders hold most tokens and “community” gets crumbs, retail is likely to just exit liquidity later.

Allocation only tells you who owns what; vesting schedules tell you when those owners can actually sell. You need to see how long team and investor tokens are locked, whether they vest slowly or unlock in big cliffs, and how those major unlock events line up with the roadmap and planned marketing pushes. Slow, multi-year vesting that tracks real product progress is usually healthier. Huge cliffs in the first year or two, especially combined with aggressive promotion, often mean early insiders are preparing to sell into retail interest.

Historically, many collapsed tokens shared the same pattern: aggressive emissions, overly generous early rewards, and enormous insider unlocks that landed just as public hype peaked. Once those extra tokens started flowing into the market, price could no longer absorb the sell pressure. 

As a practical rule, smooth multi-year vesting with a reasonable community and ecosystem share tends to support a more sustainable market structure. Massive early unlocks, a tiny circulating float, and heavy marketing deserve extra caution—no matter how compelling the story sounds.

4. Evaluate Technology and Security

You do not need to be an engineer to perform basic security checks. A quick security pass should always cover four areas:

• Code transparency
  • Is the code open-source?
  • Are there public repos on GitHub/GitLab with:
    • Real commit history
    • Multiple contributors
    • Recent, ongoing updates
  • If everything is closed, undocumented, or hidden behind marketing pages, you’re taking the team’s word for it with no independent review of what actually runs on-chain.
• Audits
  • Has a reputable firm audited the smart contracts?
  • Is there a public report, not just a logo on the homepage?
  • Did the audit:
    • Find critical issues?
    • Show they were fixed?
  • In DeFi and complex protocols, no audit at all is a major warning sign. Serious teams treat audits as an ongoing process, not a one-time checkbox.
• Bug bounties
  • Does the project run a structured bug bounty program?
  • Do they invite external researchers to find issues and pay them for responsible disclosure?
  • That signals they expect bugs, have a plan to handle them, and don’t pretend the code is perfect.
• Security track record
  • Has the project been hacked or exploited before?
  • If yes, how did the team respond?
    • Did they patch quickly?
    • Communicate clearly?
    • Compensate users where possible?
    • Publish a detailed post-mortem?
  • Strong teams behave transparently and fix root causes. Weak teams deflect blame, go quiet, or quietly relaunch without explaining what went wrong.

Reports still show that hacks and exploits drain billions of dollars from crypto every year, even as some types of crime decline. If a project holds or moves user funds but treats security as an afterthought—no open code, no real audits, no bounties, no clear incident history—the safest move is to walk away, no matter how exciting the upside looks on paper.

5. Research the Team, Governance, and Backers

People matter as much as tech. Even the best protocol design can fail if the team, governance, or partners are weak. You can break this part of your crypto research into a few concrete checks:

Team

Look at who is actually building and running the project. Do the founders and core contributors use real identities, with verifiable profiles on LinkedIn, GitHub, or past companies? 

Their backgrounds should line up with what they claim—if they say they’ve shipped complex infrastructure before, you should see traces of that in past roles, open-source work, or previous products. 

Prior experience in engineering, security, finance, or infrastructure is a stronger signal than vague “serial entrepreneur” branding with no track record. If you can’t find much about the team beyond first names and cartoon avatars, you’re taking on extra trust risk.

Governance model

Next, study who controls the protocol and the treasury. Is power concentrated in a small multisig, a single company, or a tightly held foundation, or is there a broader on-chain governance process with checks and balances? 

You want to understand who can unilaterally change key parameters such as fees, token supply, liquidity controls, or pause switches on the protocol. 

A setup where one group can flip a switch and drain or freeze funds is much riskier than one where changes require transparent proposals, time delays, and broad holder approval. Clear, documented governance is a strong sign; opaque control structures are not.

Backers and partners

Legitimate backers and integrations can add credibility, but you need to look past the logo wall. Reputable venture firms, ecosystem funds, or launchpads with a history in infrastructure, DeFi, or core tooling usually run their own due diligence before investing. 

Genuine partners tend to show up in actual product integrations, co-announced launches, shared documentation, or on-chain activity—not just in a slide full of big-brand logos. 

When you research, look for concrete signs: joint blog posts, technical integrations, liquidity programs, or SDK usage, not just vague “partnered with X” claims.

When to be extra cautious

Raise your guard when everything is anonymous and the same small group controls both the treasury and powerful admin keys. That combination gives them the ability to change rules, redirect funds, or shut things down without accountability. 

Be sceptical of “partnerships” that amount to nothing more than copied logos on a deck, with no public confirmation from the other side. 

Anonymous or pseudonymous teams are not automatically bad—early Bitcoin and Ethereum history proves that—but when anons ask you to trust them with full smart-contract control, upgrade authority, or large treasuries, you should demand much stronger technical, economic, and on-chain evidence before you put money at risk.

6. Look at Adoption and On-Chain Data

Good crypto research always asks a simple question: does anyone actually use this thing?

A token can trend on social media for weeks, but if there’s no on-chain activity or protocol usage behind it, the investment case is thin. Use analytics platforms like DeFiLlama, Dune, Nansen, or Token Terminal to see whether real users and real value are flowing through the system.

Key adoption metrics to check

• Active addresses / users
  Look at how many unique wallets interact with the protocol over time (daily, weekly, monthly). You don’t need millions of users, but you do want a clear trend:
  • Are active addresses growing, roughly stable, or trending down? 
  • A project that claims explosive adoption but shows flat or shrinking user numbers is out of sync with its own story.
• Transaction volume and fees
  High token price with very low volume and almost no fees suggests speculation, not genuine demand. Healthy projects show:
  • Steady or rising transaction volumes
  • Meaningful fee generation that proves people are paying to use the protocol
  • If most transactions are tiny “dust” amounts or look suspiciously repetitive, you may be looking at wash trading or vanity metrics rather than real activity.
• Total Value Locked (TVL) for DeFi
  For DeFi protocols, TVL tells you how much capital sits in the contracts. Focus on:
  • Trend – is TVL rising, stable, or collapsing?
  • Diversity – liquidity from many wallets across several pools/markets is healthier than a spike from one or two whales.
  • Be wary of TVL that jumps only when aggressive liquidity mining or yield farming is live and then collapses as soon as rewards taper off; that usually indicates mercenary capital, not sticky, long-term users.
• Revenue and connection to the token
  Check whether the protocol earns real fee income (from swaps, borrowing, liquidations, etc.) or if most “revenue” is just token emissions counted twice. Then ask:
  • Is there any mechanism that connects this revenue to token value (buybacks, burns, fee-sharing)?
  • Or do fees accrue solely to the company or another asset while the token just absorbs dilution?
  • Stronger projects have a clear, transparent story for how economic value flows through to the token or, at minimum, to long-term ecosystem health.
• Patterns, not just numbers
  Don’t just look at absolute values—watch the behaviour behind them:
  • Sharp, reward-driven TVL spikes that vanish when incentives end suggest fragile demand.
  • Flat or declining usage while marketing, influencer campaigns, and exchange listings ramp up is a warning that narrative is outrunning reality.
  • If one or two wallets control most of the TVL, circulating supply, or voting power, you face serious concentration risk—those holders can move markets, governance, or liquidity in ways that hurt smaller investors.

The metrics don’t have to be huge, especially for early-stage projects, but they should broadly match the story.

A protocol that claims growth should show some growth; one that claims resilience should show activity and revenue that hold up beyond the initial hype cycle.

7. Study Market Structure: Liquidity, Listings, and Pricing

Even if a project looks solid on paper, it can still be a bad trade if the market around the token is thin or fragile. Market structure is about where the token trades, how easily you can get in and out, and how current price lines up with future supply.

After you’ve gone through these checks, always come back to one practical question: “Can I exit this position without blowing up the price?”

If the honest answer is “probably not” for the size you want to trade, it doesn’t matter how strong the narrative, tech, or tokenomics look—you’re dealing with a fragile market where your real risk is being trapped in an illiquid token.

8. Map the Competition and Narrative

No token lives in a vacuum. You need to know where it sits in the market and what story it’s riding to see if it has a real edge or is just another name in a crowded category.

Once you’ve slotted a project into the right category, you can judge it by the metrics that actually matter in that lane instead of treating every token as something unique. A Layer 1 should stand up on security, throughput, and developer ecosystem. A DEX should be competitive on volume, liquidity, and fee structure. A lending protocol should show disciplined risk controls and healthy collateral.

From there, mapping competitors forces you to get specific. If a new DEX has similar fees, worse UX, and tiny volume compared with established players, it needs an exceptional differentiator to deserve your capital. If a Layer 2 offers no real advantage over existing rollups on speed, cost, or ecosystem, you’re mostly buying a story, not a structural edge.

Finally, separate narrative from fundamentals. Narratives move in cycles—DeFi, NFTs, restaking, RWAs, memes. Tokens that happen to fit the current story can run hard just because attention rotates into their sector. That alone doesn’t make them good investments.

The stronger setup is a project that both rides a strong narrative and shows real usage, robust tokenomics, solid security, and a clear competitive edge. Projects that exist mainly to surf hype, with no durable fundamentals underneath, usually fade once the spotlight shifts to the next trend.

9. Learn to Spot Red Flags and Scams

You don’t need to catch every scam pattern. Just avoid the obvious ones. A big part of good crypto research is simply learning to walk away early when something looks off, instead of trying to outsmart it.

Common red flags include:

Guaranteed returns or “risk-free” yield, especially double-digit APY with no clear revenue source.

Any project promising fixed, high returns with “no risk” is waving a red flag. Real yields always come from somewhere—trading fees, lending spreads, real-world revenue—and they always fluctuate. 

If a platform offers 20%+ APY and can’t clearly explain how that yield is generated and what could cause it to drop, you’re likely looking at a Ponzi-style setup where old users are paid with new deposits, not genuine profit.

Aggressive referral / MLM structure where rewards come mostly from recruiting new users.

Healthy projects may have referral programs, but the core value still comes from a product people actually use. 

In scams, most of the “profit” comes from bringing in new people, unlocking extra tiers, or building “teams.” If the income story is mainly “recruit more people under you” rather than “use this thing that solves a real problem,” it’s closer to a pyramid scheme with a crypto veneer.

No transparency on token allocations, vesting, or where funds go.

Legitimate teams usually publish clear token allocation charts, vesting schedules, and some breakdown of how raised funds are used (development, security, operations, liquidity). 

When you can’t find details on who owns what, when insider tokens unlock, or how funds are stored and spent, you’re flying blind. Opaque tokenomics and missing vesting info often hide massive insider allocations and looming sell pressure.

Fake audits or fake partnerships (logo farms, unverifiable claims).

Scam projects often paste well-known company logos on their site, claim “strategic partnerships,” or flaunt “audits” that either don’t exist or come from non-entities. Always click through: does the auditor have a real website and reputation? 

Does the supposed partner mention this project anywhere official? If you can’t verify an audit report or a partnership on the other party’s channels, treat it as marketing fluff at best—and outright deception at worst.

Pressure tactics – “Only 24 hours left”, “Don’t miss this life-changing opportunity.”

High-pressure, time-limited pitches are designed to shut down your critical thinking. Scammers want you emotional and rushed so you don’t ask detailed questions or read the fine print. 

If every message is about urgency, FOMO, and how you’ll “miss the next Bitcoin,” it’s a strong sign the opportunity doesn’t stand up to calm, slow analysis.

Law-enforcement cases and reports show that many major crypto scams were simple Ponzi or pyramid schemes dressed up in crypto branding—flashy websites, tokens, and “smart contracts” layered on top of very old fraud models. 

You don’t need to analyse every line of code to stay safe; you just need to be strict about walking away when the basics don’t add up.

If something feels off, skip it. Markets won’t run out of opportunities, but your capital is finite.

10. Build a Simple Crypto Research Checklist

To keep your DYOR consistent, run through a quick checklist before you buy. Treat it like a pre-flight check: if too many items fail, you don’t take off.

Project basics

Check that the project clearly explains what it does, who it serves, and how the product actually works today. There should be a visible link between the website, documentation, and a live product (or at least a functioning testnet or beta). If the materials stay vague, rely on buzzwords, or describe grand visions with no concrete product after a year or two, that’s a sign to pause.

Token utility

Confirm that the token has specific, necessary jobs in the system—paying fees, providing collateral, granting access, securing the network, or enabling governance. Look for real “sinks” where tokens are burned, locked, or used up through genuine activity, not just endless emissions, yield farming, or “points with a logo.” If you could replace the token with stablecoins and nothing important breaks, utility is weak.

Tokenomics

Study the supply structure: total and max supply, how much is already circulating, and how much unlocks over time. Check the split between team, investors, treasury, and community. Understand vesting schedules and upcoming cliffs—especially large insider unlocks that could create heavy sell pressure. Healthy designs spread unlocks over years and give a fair share to the community; rushed unlocks and tiny float plus big marketing are caution signals.

Tech & security

Look at how the project treats security. Is the code open-source with active repositories? Have reputable firms audited the smart contracts, and are reports public? Are there bug bounty programs to reward researchers who find issues? Also check the security history: past exploits, how quickly they were fixed, whether users were compensated, and whether the team published a detailed post-mortem. Casual or evasive attitudes toward security are a major red flag.

Team & governance

People matter as much as protocol design. See whether founders and core contributors use real identities and have verifiable experience relevant to what they’re building. Review the governance model: who controls admin keys, can pause contracts, change fees, or alter token supply? Is power concentrated in a small multisig or one company? Also look at backers and partners, but verify that “partnerships” are real integrations, not just logo collections.

Adoption & metrics

Check whether anyone actually uses the project. Look at active addresses, transaction counts, and protocol fees over time. For DeFi, examine TVL, how diversified it is, and whether it sticks around after incentives drop. Review protocol revenue and whether any of it connects to token value. Numbers don’t need to be huge, but they should show a pattern that matches the project’s story: genuine, growing usage rather than one-off spikes from short-term rewards.

Liquidity & market structure

Assess how easily you can enter and exit a position. Review which exchanges list the token, daily volume, order-book depth, and Automated Market Maker (AMM) pool sizes. Compare market cap to fully diluted valuation (FDV) so you see how much dilution lies ahead as locked tokens unlock. If a small order moves the price significantly, or if everything depends on one illiquid venue, the trade carries extra risk even if the project looks solid.

Competition

Place the project in its category: Layer 1, Layer 2, DEX, lending, restaking, gaming, DePIN, RWA, meme, and so on. Then compare it with the main competitors on fees, user experience, security, and actual adoption. Ask what real edge it has—better tech, lower costs, stronger brand, deep integrations, or something else tangible. A project that only differentiates on marketing buzz within a crowded category has a weaker case.

Red flags check

Do a quick pass for obvious warning signs: guaranteed or “risk-free” high yields, aggressive multi-level referral schemes, opaque token allocations, missing or fake audits, and pressure tactics like constant countdowns and “life-changing opportunity” language. Anything that leans heavily on hype while avoiding specifics on risks, tokenomics, and security deserves extra scepticism.

Position sizing

Finally, decide how much you can truly afford to lose if you’re wrong. Even strong projects can suffer deep drawdowns or fail outright. Size each position so that a full loss would be painful but not ruinous, given your income, savings, and overall portfolio. Good crypto research isn’t just picking assets—it’s matching exposure to your real risk tolerance.

If a coin fails on several of these checks, that’s your answer: you don’t need to force a justification. In crypto, saying “no” often protects your capital better than chasing one more story.

11. Manage Risk Like an Adult

Good crypto research doesn’t remove risk—it just keeps you from taking blind, emotional bets. Even with solid analysis, crypto remains a highly volatile, speculative space, so your behaviour and risk management matter as much as the projects you choose.

Treat small caps and new tokens as high-risk bets, not savings

New tokens, micro-caps, and experimental DeFi protocols can move sharply in both directions. Many never recover after a crash, suffer from low liquidity, or break under stress. 

Treat these positions like venture-style bets or speculative trades, not like a place to park money you can’t afford to lose. If losing the entire amount would impact your rent, bills, or emergency fund, it’s too large for this category.

Size positions so one failure doesn’t wreck your portfolio

Assume that some of your ideas will be wrong. Position sizing is what stops a single bad pick from wiping out months or years of progress. 

Keep each speculative position to a small percentage of your total portfolio, and make especially risky plays (new coins, illiquid tokens, unaudited DeFi) even smaller. The goal is to stay in the game long enough for your good decisions to matter.

Diversify across themes and assets, not just one narrative

Spreading risk means more than buying many tokens from the same trend. If you only hold assets tied to one narrative—such as a single chain, one DeFi sector, or a cluster of meme coins—you’re still heavily exposed to that theme failing. 

A more resilient approach mixes different categories (Layer 1s, Layer 2s, DeFi, infrastructure, blue-chip vs experimental) and keeps a portion of your overall wealth outside crypto altogether.

Decide your profit-taking and loss-cutting levels in advance

Before you enter, decide under what conditions you’ll take profit and when you’ll accept a loss. That might be price levels, time-based rules, or fundamental triggers (e.g. a major exploit or governance change). Writing this down ahead of time helps you act when markets are emotional instead of improvising in the middle of a pump or crash. Sticking to predefined rules is one of the simplest ways to reduce regret and panic.

Stay sceptical of ideas that come from hype first, facts second

If your first contact with a token is a celebrity endorsement, an influencer thread, or a friend promising a “sure thing,” treat it as a signal to slow down, not speed up. Hype-driven projects often provide little documentation, vague tokenomics, and no clear path to sustainable value. Use those mentions as a prompt to do deeper research—not as a shortcut to conviction.

Regulators repeatedly emphasise that retail investors should treat crypto as high-risk, speculative exposure—not as guaranteed income or a substitute for stable savings. 

Good research, sensible sizing, and disciplined behaviour can’t turn crypto into a safe asset class, but they can dramatically improve your odds of surviving its volatility with your capital—and your sanity—intact.

Make Crypto Research a Habit, Not a One-Off

Crypto research (DYOR) isn’t a one-time homework assignment. It’s a habit:

• Understand what the project does and how the token fits in.
• Check supply, unlocks, and incentives so you’re not the exit liquidity.
• Look at real usage, security, and market structure — not just the price chart.
• Watch for obvious red flags and walk away when something doesn’t add up.

You won’t predict every move, and you’ll still get some calls wrong. But a simple, consistent research process filters out a huge chunk of scams, weak designs, and structurally bad bets.

If you prefer to access crypto through exchanges, brokers, or apps rather than managing everything yourself, the quality of their infrastructure matters too. Many platforms rely on providers like ChainUp for secure wallet tech (MPC wallet), policy-based controls, liquidity connectivity, and compliance tools working behind the scenes.

That doesn’t replace your own crypto research — but it does mean that when you decide to act, you’re doing it on rails built for security and scale, not on a fragile stack.

If you’re on the builder side and want that level of infrastructure for your users, you can talk to the ChainUp team about trading and compliance solutions that support safer long-term growth.