With thousands of DeFi projects launching every year, knowing how to separate quality from noise is essential. This framework gives you a systematic approach to evaluating any DeFi project.
The DYOR Framework
DYOR (Do Your Own Research) isn’t just a meme—it’s survival. Use this 6-part framework for every project you consider:
- Problem & Solution – What does it do?
- Team & Backers – Who built it?
- Tokenomics – How do the economics work?
- Technology & Security – Is it safe?
- Traction & Metrics – Is anyone using it?
- Competitive Position – Why this over alternatives?
1. Problem & Solution
Key Questions
- What problem does this project solve?
- Is this a real problem that people have?
- Is blockchain necessary, or could this be done without it?
- Can you explain what it does in one sentence?
Red Flags
- Vague descriptions with buzzwords but no clarity
- “Revolutionary” claims without substance
- Problems that don’t really need solving
- Solutions looking for problems
Where to Look
- Project website
- Whitepaper / documentation
- Founder interviews
2. Team & Backers
Key Questions
- Who are the founders and core team?
- What’s their background and track record?
- Are they doxxed (publicly known)?
- Who invested in this project?
- Are advisors legitimate and involved?
What to Check
| LinkedIn: | Verify work history, connections |
| Twitter/X: | Engagement, reputation, history |
| GitHub: | Actual development contributions |
| Past projects: | Did previous ventures succeed or fail? |
VC Backing
Venture capital backing isn’t everything, but it provides some validation:
- Top tier: a16z, Paradigm, Polychain, Pantera
- Reputable: Delphi, Framework, Multicoin
- Check: Did they actually invest or just advise?
3. Tokenomics Analysis
Key Metrics
| Metric | What to Look For |
|---|---|
| Total Supply | Fixed or inflationary? What’s the cap? |
| Circulating Supply | What % is currently tradeable? |
| FDV vs. Market Cap | Large difference = future dilution |
| Token Distribution | Team, investors, community split |
| Vesting Schedule | When do locked tokens unlock? |
| Token Utility | Why hold the token? What does it do? |
Healthy Tokenomics
- Community allocation > 50%
- Team allocation 10-20% with 2-4 year vesting
- No massive unlocks in the near term
- Clear token utility (governance, fee sharing, staking)
- Sustainable emissions if inflationary
Red Flags
- Team/insiders hold >30%
- Short vesting periods (<1 year)
- Unclear token utility
- FDV is 10x+ current market cap
- Large unlock events soon
4. Technology & Security
Security Checklist
- Has the code been audited? By whom?
- Is the code open source and verified?
- Is there a bug bounty program?
- Has there been any previous exploits?
- How long has it been live without issues?
Audit Quality Tiers
| Top Tier: | Trail of Bits, OpenZeppelin, Consensys |
| Reputable: | Certik, PeckShield, Hacken |
| Caution: | Unknown auditors, “self-audited” |
Technical Signals
- GitHub activity: Regular commits, multiple contributors
- Documentation: Clear, complete, maintained
- Upgrade mechanisms: Multisig, timelock, governance
5. Traction & Metrics
On-Chain Metrics
| Metric | Where to Find |
|---|---|
| Total Value Locked (TVL) | DefiLlama |
| Daily Active Users | Dune Analytics, Token Terminal |
| Transaction Volume | DefiLlama, Dune |
| Revenue/Fees Generated | Token Terminal, DefiLlama |
| User Growth Trends | Dune dashboards |
What Good Traction Looks Like
- Consistent or growing TVL
- Real transaction volume (not wash trading)
- Revenue covering operating costs
- Organic user growth
- Retained users, not just one-time interactions
Red Flags
- Declining TVL without market explanation
- Volume only from incentivized farming
- Majority of TVL from team/insiders
- Metrics that don’t match claims
6. Competitive Analysis
Questions to Ask
- Who are the main competitors?
- What’s this project’s unique advantage?
- Why would users choose this over alternatives?
- Is the moat defensible?
- How does market share compare?
Competitive Moats in DeFi
| Liquidity: | Deep liquidity attracts traders (Uniswap) |
| Integrations: | Other protocols build on top (Chainlink) |
| Brand/Trust: | Reputation for security (Aave) |
| Technology: | Unique technical innovation |
| Network Effects: | Value increases with more users |
Research Resources
| Resource | What It Provides |
|---|---|
| DefiLlama | TVL, yields, protocol data |
| Token Terminal | Revenue, P/E ratios, financials |
| Dune Analytics | Custom on-chain dashboards |
| Messari | Research reports, token profiles |
| CoinGecko | Token data, links, basics |
| Rekt News | Hack history, exploits |
| DeFi Safety | Protocol safety scores |
Quick Research Template
Project: [Name]
1. What it does: [One sentence]
2. Team: [Known/Anonymous] [Background]
3. Backers: [VC names if any]
4. Token:
- Circulating: [X] / Total: [Y]
- Market Cap: $[X] / FDV: $[Y]
- Team allocation: [X%], vested [Y] years
5. Security:
- Audits: [Yes/No] by [Firm]
- Bug bounty: [Yes/No]
- Time live: [X months]
6. Metrics:
- TVL: $[X]
- Daily users: [X]
- Revenue: $[X]/month
7. Competitors: [Names]
8. Unique advantage: [What sets it apart]
9. Red flags noted: [List any]
10. Conclusion: [Buy/Pass/Watch]
Key Takeaways
- Use a systematic framework—don’t skip steps
- Verify claims independently; don’t trust marketing
- Check team backgrounds and track records
- Understand tokenomics before investing
- Security audits are necessary but not sufficient
- Real traction beats promises
- Compare to competitors—why this project?
- If you can’t explain it, don’t invest in it