DYOR Framework: A Step-By-Step Due Diligence Checklist

What Is DYOR?

"Do Your Own Research" means you verify information yourself instead of trusting what others tell you. In crypto, this is critical because scams and failed projects are common.

DYOR isn't a one-time check. It's an ongoing process of verifying claims, monitoring progress, and reassessing your decisions as new information emerges.

Why DYOR Matters

Crypto is unregulated in many ways. There's no FDIC insurance, no customer service hotline, and scams are everywhere. Doing your own research helps you:

• Avoid scams and rug pulls
• Identify projects with real utility vs hype
• Make informed decisions aligned with your risk tolerance
• Understand what you're actually buying

DYOR Framework: Five Key Areas

1. Team and Background

Who's behind the project? Are they real, experienced, and trustworthy?

What to Check

• Team members: Names, LinkedIn profiles, past projects, technical backgrounds
• Transparency: Are team members public or anonymous? Anonymous isn't automatically bad, but it requires more scrutiny
• Track record: Have team members delivered on past projects? Any failed projects or controversies?
• Advisors: Who are the advisors? Are they legitimate and actually involved?
• Social media: Check team members' Twitter, GitHub, personal websites. Do they match project claims?

Red Flags

• Completely anonymous team with no verifiable credentials
• Fake LinkedIn profiles or stolen photos
• Team members with history of failed projects or scams
• Advisors listed but not actually involved (check their social media)

2. Tokenomics and Economics

How does the token work? What's the supply, distribution, and economic model?

What to Check

• Total supply: Fixed? Infinite? Deflationary?
• Circulating supply: How much is actually available?
• Distribution: How are tokens allocated? Team, investors, public sale, treasury?
• Vesting: Are team/investor tokens locked? For how long?
• Inflation: Will new tokens be minted? At what rate?
• Utility: What does the token actually do? Governance? Staking? Fees? Access?
• Value proposition: Why would someone buy and hold this token?

Red Flags

• Team holds 50%+ of supply (high risk of dump)
• No vesting schedule (team can sell immediately)
• Unrealistic tokenomics (promises of guaranteed returns)
• No clear utility or value proposition
• High inflation rate that dilutes holders

3. Technology and Code

Does the technology work? Is the code audited and open source?

What to Check

• GitHub: Is code open source? Active development? Recent commits?
• Smart contracts: Are contracts verified on Etherscan? Can you read the code? (See our guide)
• Audits: Has code been audited by reputable firms? (CertiK, OpenZeppelin, Trail of Bits, etc.) Read the audit reports.
• Testnet: Has project launched on testnet? Can you test it?
• Technical docs: Are there whitepapers or technical documentation? Are they detailed or vague?
• Uniqueness: Is this actually innovative or just copying another project?

Red Flags

• No code available (closed source)
• No audits or only self-audits
• Audit reports show critical issues that aren't addressed
• Code hasn't been updated in months (project may be abandoned)
• Vague or unrealistic technical claims

4. Community and Social Proof

What does the community look like? Is it genuine or botted?

What to Check

• Discord/Telegram: Join communities. Are discussions real or just shilling? Are questions answered?
• Twitter: Check follower quality (real accounts vs bots), engagement rates, response to criticism
• Reddit: Check subreddits for balanced discussions
• Developers: Are there active developers building on the platform?
• Partnerships: Are partnerships real? Verify claims with the partner
• Media coverage: Is coverage from reputable sources or just paid promotions?

Red Flags

• Obvious bots (accounts with no followers, generic names, copied content)
• Community bans anyone asking questions
• Fake partnerships (check if partner actually announced)
• Only paid influencer promotions, no organic discussion
• Community is just shilling, no actual users

5. Competition and Market

How does this project compare to alternatives? Is there real demand?

What to Check

• Competitors: Who else is solving this problem? How does this project compare?
• Market size: Is there real demand for this solution?
• Differentiation: What makes this project unique vs competitors?
• Adoption: Are people actually using it? Check on-chain metrics (transactions, users, TVL for DeFi)
• Roadmap: Are milestones realistic? Is progress on track?

Red Flags

• No clear differentiation from existing projects
• Solves a problem that doesn't exist
• Unrealistic roadmap with impossible timelines
• No actual users despite claims of adoption

Step-by-Step DYOR Process

Use this checklist for each project:

Tools and Resources

Blockchain Explorers

• Etherscan: Ethereum mainnet explorer
• Arbiscan, Optimistic Etherscan: Layer 2 explorers

On-Chain Analytics

• Dune Analytics: Query on-chain data, check project metrics
• Nansen: Wallet labeling, smart money tracking

Other Tools

• GitHub: Check code repositories
• CoinMarketCap/ CoinGecko: Market data, tokenomics info
• Revoke.cash: Check smart contract approvals

Common Scam Patterns

Watch out for these red flags:

Rug Pulls

Developers abandon project after raising funds. Signs: Anonymous team, no code, tokens unlocked, sudden disappearance.

Honeypots

Tokens you can buy but not sell. Check contract code for sell restrictions before buying.

Pump and Dump

Coordinated price manipulation. Signs: Sudden price spike, coordinated social media shilling, then crash.

Phishing

Fake websites or contracts that look legitimate. Always verify URLs and contract addresses from official sources.

Real-World Example: Evaluating a DeFi Protocol

Scenario: You're considering using a new DeFi lending protocol.

1. Team: Check if team is doxxed, look for past projects, verify LinkedIn
2. Code: Find contract address, verify on Etherscan, check if code is readable
3. Audits: Search for audit reports, read them, check if critical issues were fixed
4. Tokenomics: Understand token distribution, vesting, inflation
5. TVL: Check actual total value locked on-chain (don't trust website claims alone)
6. Comparisons: Compare to Aave, Compound. What's different? Is it better?
7. Community: Join Discord, see if real users discuss actual usage
8. Test: Start with small amount, test functionality before larger deposits

Take Notes

Keep a DYOR notebook or document for each project:

• Project summary (what it does, key features)
• Team notes (who, backgrounds, red flags)
• Tokenomics summary (supply, distribution, utility)
• Technology notes (code quality, audits, uniqueness)
• Competitive analysis (alternatives, differentiation)
• Decision: Invest? Pass? Monitor?

Refer back to notes when reassessing. Projects change over time.

DYOR Doesn't Mean You're Alone

DYOR means you verify claims yourself, but you can still learn from others:

• Read analyses from reputable sources (but verify their claims)
• Join communities for discussion (but don't trust blindly)
• Follow experienced investors (but do your own checks)
• Use tools and data (but interpret them yourself)

The difference: You're making decisions based on your research, not just following others.

When to Walk Away

Sometimes the best decision is to pass. Walk away if:

• You find too many red flags
• You don't understand how it works (don't invest in what you don't understand)
• The risk/reward doesn't align with your goals
• There are better alternatives
• You feel pressured to decide quickly (scams often create urgency)