Author: The DeFi Edge@Twitter Compiled by: Chengdong Zou Gong, MarsBit
Conducting your own research is the most powerful advantage in Crypto. But most people are not good at research. Here’s my crypto research framework to make it easy: (so you don’t have to rely on KOLs).
Research Framework
Researching cryptography isn’t easy, and even where to start can be a question. My approach is to break it down into 4 broad areas:
• Technical understanding
• Profit tips
• Encryption skills
• Beyond encryption
Let’s take a closer look at it!
Area 1: Understanding Technology
You have to know what you are investing in. If you don't know what ZK-Rollups are, you don't see the value of Starknet. Understand your experience level and realize that there are skills for each level. It's kind of like a skill tree in an RPG.
Novice skill tree :
• Encrypted security
• Web 3 use cases
• How Bitcoin works
• Hot wallet vs. cold wallet
• How Ethereum works
• What is ETH merging?
• Learn about yield farming
• PoS proof and PoW proof
Intermediate skill tree:
• DEX and CEX
• Liquidity mining
• Pool 1 vs. Pool 2
• Basic Token Economics
• L0/L1/L2
• Understand the main Layer 1
• Impermanent losses vs slippage vs staking
Expert skill tree :
• MEV
• Options
• Advanced Token Economics • Governance Proposals
• Technical differences between L2 Roll-Ups These are not meant to be complete.
(No one wants to see 100+ tweets in a row) I will be expanding the skill tree/w recommended resources in the future.
Where to study? I always recommend learning directly from the source first. Let's say you want to know about The Merge. Try visiting the Ethereum official website first. Afterwards, you can watch YouTube videos or read topics from trusted sources.
Area 2: Profitable Techniques There are many brains who know the technical details, but they don't make money. Why? Because learning how to make money is a set of skills in itself. (This is why having some poker skills is an advantage in cryptocurrency)
Profitable skills include:
• make decisions
• Cognitive biases
• Trading Psychology
• Portfolio construction
• Profit strategies
• Risk management strategies
Domain 3:
Crypto Skills A skill unique to Crypto. Learning these will give you an advantage.
• Learn about metaverse games and new narratives
• Discover new protocols
• Mining whale wallet
• On-chain analysis • Let me give you a few examples
Discover new protocols/potential
• Your connections and friends
• Search via DeFiLlama
• View on-chain data/whale wallet
• Research what VCs are investing in (DoveMetrics)
Use the right tools
Tools are leverage—the right tools can save you valuable time. Last week I shared a topic with one of my favorite people.
Track Whale Wallet
Whales are wallet addresses that hold large amounts of cryptocurrency. In theory they have an "advantage" and we can see them in action.
• You can use Nansen's "Smart Money" feature.
• Debank has a list
• Create your own list.
Create your own list (basic) • Find a coin that you think has a lot of smart money in it. I use GMX.
• Go to blockchain explorer (Etherscan, Arbiscan)
• View the top holders of the coin
• Copy and paste wallets in Zapper FI
• Observe what they hold
Area 4: Research beyond cryptography
Don’t spend all day researching cryptocurrencies. Beyond encryption, there are other areas where it can give you an advantage. You want it to be T-shaped:
• Broad understanding of multiple disciplines
• Drill down into an area
Areas of Study: You won't be 10/10 at everything. That's not the point - learn enough so it doesn't hold you back.
• Find a reliable book on the subject
• Have a few “go-to” people in each area of focus.
What cryptocurrencies I chose to learn about has evolved to the point where I can no longer keep up. So, how do I prioritize my research?
At a high level, limiting my scope to DeFi.
• I can’t keep up with NFTs.
• I can't keep up with individual stocks (index funds only).
Focus on DeFi I focus on ecosystems with a lot of DeFi activity - I'm not looking at Cardano, Elrond or Algorand (yet). Most of my current research is based on: 1. New protocols 2. New technologies 3. Real world adoption
Speaking of new deals...
Do an in-depth study of the protocol
You are feeling the "buzz" of a certain token. But you're smart enough not to blindly trust someone. It's time to do your own in-depth research before investing. That's what I'm looking for.
Learn from the source
It's tempting to want to watch a YouTube video or read about a topic. Start with the protocol’s whitepaper, Medium, and GITHUB. You want to form your own opinion before learning from others. You don’t want their biases to influence your thinking.
5 areas I created for myself as a framework for evaluating protocols.
• Strategy
• implement
• people
• Funding
• Token Economics (or Token Design) By the way, this is not a complete list. This is to get your brain spinning.
strategy:
• How is it different from competitors?
• What problem was solved?
• What moats are there?
• How to acquire users?
• What's on the roadmap?
implement
• Did the team meet milestones?
• What is the UX/UI of the protocol like?
• What audits has it passed? By whom?
• How about marketing?
• Developer activity
people
• What kind of influencers are promoting?
• Background of founder and team
• Check sentiment on social media
• Check community atmosphere
• VC and initial seed rounds
• Partnerships
funds
• How are founders and teams compensated?
• What does its funding consist of?
• How much revenue does it generate?
• What is its runway and burn rate?
• How much money did it raise?
Tokenomics
• How tokens increase in value
• What is the supply/maximum supply?
• How are tokens initially distributed?
• What are the use cases for the token?
• How does the agreement reduce selling pressure?
Seeking FUD
It's easy to feel FOMO and get caught up in confirmation bias as to why a protocol is so great. I'm always looking for reasons why agreements suck. This is where Twitter comes in handy. Look for reasons why the agreement failed and think about it.
Study suggestions
The following sections are about how to best organize your studies. Most are techniques from my college days that I've adapted to fit the rapidly evolving world of crypto.
Create a "reading" system
I saw Lido's proposal for a new treasury, but I couldn't understand it at the time. So I use the Chrome app "Notion Web Clipper" and save it in a database called "To Read". I block time in my calendar each week to go through my to-read list.
In-depth research
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 intensely. Work done = time x intensity. It's kind of like a gym. 25 minutes of intense workout > 2 hours of lazy workout.
completely focused
I studied without distractions. I blocked social media and put my phone in another room. Consider using the Pomodoro Technique. I studied for 50 minutes and rested for 10 minutes.
Use the Feynman Technique
Richard Feynman was a Nobel Prize-winning physicist. His secret? After you learn it, try to explain it simply so that a 12-year-old can learn it. I encourage you to tweet and write. Explaining things will help understand your knowledge gaps.
Plan content information flow
If you eat garbage, your body becomes garbage. Be careful who you choose to learn from. Instead of following hundreds of people, learn from a few quality accounts. Stay on top of your Twitter account, newsletter, and podcast.
Create a note-taking system and take notes to improve your comprehension and memory. The right systems and software can help you connect. I use Zettelkasten (method) + Obsidian (software). Read "Building a Second Brain" by Tiago Forte.
Get proper rest
I do up to 4 hours of core research every day. You need to rest to maximize what you absorb. Take a break, get a good night's sleep, and go for a walk. The body needs a break from the gym to build muscle. The brain needs rest to retain information.
healthy brain
Make sure you have a solid foundation—a healthy brain. • Exercise regularly • Stay hydrated • Enjoy time in nature • Brain-boosting foods (fatty fish, vegetables, berries) • Find healthy ways to cope with stress • Limit social media (sarcasm, I know)
probabilistic thinking
“All this research is being traded by people trading YOLO for meme coins”
"So much research doesn't stop an exploit from killing your revenue."
Look, there are no guarantees in cryptocurrencies. Your research can increase your odds of success.
To summarize I've been putting off writing this streak for a while. I don't want it to get too big. Come back and *like* the tweets you want to know more about. This will be my clue for further research into the topic in the future. Good luck with your research!