DeFi analysts teach you how to build an analysis and research framework

Learning to do your own research is the most powerful advantage in cryptocurrencies.

Learning to do your own research is the most powerful advantage in cryptocurrencies, but most people are terrible at research, so this post is about my cryptocurrency research framework that might make it a little easier for you to build your research framework.

My approach is to break down cryptographic research into 4 broad areas:

• technical understanding;

• Profitable techniques;

• Cryptocurrency skills;

• and areas other than encryption;

let’s start.

Domain 1: Technical Understanding

You have to know what you are investing in. If you don’t know what a ZK-Rollup is, you can’t see the value of Starknet and learn more, it’s a bit like a skill tree in an RPG game.

For newbies, the skill tree that should be lit (understood):

• Encrypted security;

• Web3 use cases;

• How Bitcoin works;

• Hot and cold wallets;

• How Ethereum works;

• What is the merger of ETH?

• Learn about yield farms;

• PoS VS PoW；

Intermediate Skill Tree:

• DEX Vs CEX；

• Liquidity mining;

• Pool 1 and Pool 2;

• Basic token economics;

• Tier 0/Tier 1/Tier 2;

• Mainstream L1;

• Impermanent loss Vs slippage Vs pledge;

Going a step further, the expert skill tree:

• MEV；

• Options;

• Advanced token economics;

• Governance;

• Technical differences between L2 Roll-Up;

Of course, there are many more, and it is not realistic to write them all here, but remember to live until you are old and learn when you are old.

The next question is, where to start?

I always recommend learning straight from the source first. Let’s say you want to learn about “merging”, try going to the Ethereum website first. Afterwards, you can watch YouTube videos or read related topics from trusted sources.

Domain 2: Profitability Skills

There’s a whole bunch of people who’ve got the technology right, but they’re not profitable. Why? Because making money is also a skill that needs to be learned individually.

Profitable skills include:

• decision making;

• Cognitive biases;

• Trading psychology;

• Portfolio construction;

• Profitable strategies;

• risk management strategy;

Domain 3: Cryptocurrency Skills

Unique skills that belong to cryptocurrencies, learning these will give you an edge:

• Learn about the Metaverse and new narratives;
• discover new agreements;
• track whale wallets;
• On-chain analysis, etc.;

I’ll give a few examples of how to discover new protocols:

• through your connections and friends;

• Search via DeFiLlama;

• Observe on-chain data/whale wallets;

• Research what VCs are investing in (DoveMetrics);

Find and use the right tool, a tool is a lever – the right tool can save you valuable time.

Whales are wallet addresses that hold large amounts of cryptocurrencies and learn to track their movements:

• You can use Nansen’s “Smart Money” feature;

• Debank has a list of whales;

How to create your own list of lists (basic):

• Looking for a coin that you think has a lot of smart money, I chose GMX;
• Go to the blockchain browser Etherscan, Arbiscan);
• Check out the top holders of the token;
• Paste the wallet address in Zapper FI;
• observe what they hold;

Domain 4: Learning beyond Crypto

Don’t spend all day researching cryptocurrencies, knowing other areas can also give you an edge. You’re going to be a T-shaped person:

• An understanding of multiple disciplines;

• Deep research in a field;

You cannot achieve a 10 in all areas for the area of ​​engagement. The point is, you need to know more so that it doesn’t hold you back:

• Find a book that is reliable in the field to read;
• There are several “go-to” people you follow in each field;

I limit my research in cryptocurrencies to DeFi, I focus on DeFi projects with huge ecosystems, and most of my current research revolves around:

1. New Agreement;

2. New technology;

3. Real-world adoption;

Speaking of the new protocol, I created a framework for myself to evaluate the protocol:

• Strategy;

• implement;

• personnel;

• cash;

• Token economics (or token design);

By the way, this is not a complete list, this is to make you think more deeply.

Strategy:

• How is it different from its competitors?

• What problem does it solve?

• What moat does it have?

• How does it acquire users?

• What’s on the roadmap?

implement

• Has the team completed the roadmap?

• What is the UX/UI of the protocol?

• What audits has it passed? By whom?

• How is the marketing?

• Developer events

personnel

• What kind of influencer is promoting it?

• Founder and team background

• Emotions on social media

• Community atmosphere

• VC and initial seed round

• Partnerships

cash flow

• How are founders and teams paid?

• What does its funding include?

• How much revenue does it generate?

• How much has it raised?

Token Economics

• How tokens accumulate value

• What is the supply/maximum supply?

• How were the tokens initially distributed?

• What is the use case for the token?

• How does the agreement reduce selling pressure?

It’s always easy to feel FOMO and get caught up in the confirmation bias thinking the protocol is so awesome. But what I’m saying is, we look for the FUD of the protocol, and that’s where Twitter comes in, look for the reasons why the protocol might fail, and think about it.

study advice

The sections below are about how to structure your studies, most of them are tricks from my college days, but I’ve adapted them and adapted them to the fast-moving world of cryptography.

Build a “to-read” system

I saw Lido came up with a new treasury proposal, but I couldn’t read it at the time, so I used Chrome’s app “Notion Web Clipper” and saved it in a database called “to be read”. I make time in my calendar each week to flip through my to-read list.

In-depth study

I do my research in the morning because that’s when I’m most focused. It’s not about how long you study, it’s about how intense you are.

Work done = time x intensity

It’s a bit like 25 minutes of intense workouts > 2 hours of laziness at the gym.

fully focused

I don’t get distracted while researching, I block social media, put my phone in another room, and use the Pomodoro method: 50 minutes of research, 10 minutes of rest.

Feyman theory

Richard Feynman is a Nobel Prize-winning physicist. The secret to his success: After you have the knowledge, try to explain it.

I encourage you to tweet and write articles explaining things that will help you understand the gap between you and knowledge.

Follow good content

If you eat junk, then your body becomes junk. Be careful who you choose to learn from, it’s better to follow a few high-quality accounts than hundreds. Consistently manage your Twitter account, newsletters and podcasts.

Create a note-taking habit

Taking notes can improve your comprehension and memory, and the right systems and software can help you build. I use Zettelkasten (method) + Obsidian (software).

proper rest

I do core research up to 4 hours a day. You need to rest to maximize the absorption of knowledge. Take a break, get a good night’s sleep, get out and about, the brain needs rest to remember information.

healthy brain

This is your strongest foundation – a healthy brain, how?

• exercise regularly

• stay hydrated

• Enjoy nature time

• Brain foods (fish oil, vegetables, berries)

• Find healthy ways to deal with stress

• Limit social media

probabilistic thinking

“So much research doesn’t stop an exploit from killing your gains.”

Nothing is guaranteed in cryptocurrencies, your research is only to increase your chances of success.