Fundamentals Research Basics — What I Look For

I get asked quite often how I go about doing my research. Where do I find my information? What specific information do I look for?

Well, instead of repeating myself in a time consuming manner, or providing bullet point advice which doesn’t really help much, I’ve decided to write a more comprehensive article so I can simply share a link in the future.

Although I seem to be developing a positive reputation and earning the respect of my peers, I’m still learning myself. For as long as I’m still learning then my content will continue to be of value to others.

Another thing to note, a lot of fundamental analysts work in teams. Although I have a team, they specialise in other fields so I work the research on my own. So, everything I’ve learned is the hard way, and through persistence and dedication to my craft. I provide FA content to two Discord servers and a successful subscriber based website (https://milkygemhunter.io). So I must be doing something right.

Below are the headed sections of what I look for when doing my research. I find this structure is useful to ensure I don’t overlook anything important in my research. As you can see for yourself it covers a lot of sections.

• Disclaimer
• Concept
• Key Features
• Security
• Team & Advisors
• Partners & Backers
• Roadmap
• Tokenomics
• Socials / Community Engagement
• Listed Exchanges
• How to Buy
• Summary
• My Rating
• Resources

Disclaimer:
This is crucially important for anyone who decides to publish content which others may base their financial/investment decisions on. Setting out a clear disclaimer may help protect you in the event of legal action should someone hold you responsible for their mistake(s).

Concept:
Generally, I’ll just copy and paste a key paragraph or sentence from the website or whitepaper here, then add my own thoughts of their abstract, problem and solution. This is to help people understand the basic purpose of the project.

Key Features:
What services and products are they building? What sets them apart from the competition? Are they filling an industry need gap?

A thorough competitors analysis is of elevated value here!

By assessing the features you’ll be able to better understand the potential value proposition of the project, which may inversely result in you assessing its a scam, a copycat, or vaporware without inherent value.

Security:
Generally, this is where I’ll include the information of a smart contract security audit, or other security measures implemented by the team (such as Bug Bounties).

Not all auditors are good at what they do. Some are so bad I have concerns over their integrity. Whilst it doesn’t contain the full list of good auditors, I use the DeFi Security Alliance as a baseline, as they audit the auditors themselves. If an auditor faces too many exploits post-audit, they’ll be removed. As Certik found out. I never trust Certik audits. A report was issued in June 2024 highlighting almost $1.3B worth of losses to Certik clients via hacks and exploits, post-audit. This insight was investigated and highlighted following Certik holding Kraken hostage for $3m a few days earlier.

Centralisation risks are very important. Now, being centralised isn’t necessarily a bad thing, sometimes it’s better they’re not as some projects aren’t suited to a democratic or decentralised process. But a centralisation risk is generally singular points of vulnerability which make hacks or exploits more likely.

Good auditors will highlight these risks and make suggestions on how to nullify them. Such as multi-sig (multi-signature) wallets; Time-lock delays (the amount of time a command will take to come into effect); Ownership renounced to smart contract control(such as a token vesting schedule) etc.

In this section I’ll generally only highlight the Critical and High Risk factors. But I’ll always include a link to the audit report so others can peruse in further detail. Looking through audit reports are also an excellent educational tool to start learning about smart contracts.

Always remember:

“A network or protocol is only as decentralised as its most centralised point; and only as secure as its most vulnerable point!”

Team & Advisors:
As part of our research, we will often interact with the leadership/development teams. Establishing communication and a rapport will generally help provide you greater insights than information which is publicly available.

As the team are building, understanding their experience & qualifications will help you make a more informed assessment on the probability that they’ll keep promises and deliver on technical development targets.

Some teams prefer to remain anonymous. Considering the US extradition and prosecution of some developers globally in the last few years for simply writing code which others exploited with criminal intent, this isn’t a surprise. But it’s also clear that the vast majority of scams and rugpulls occur from projects with anon teams. So KYC certification can help foster trust. Most KYC providers now have a tiered structure, with the higher tiers showing that the team reside in countries with high probability of prosecution. Such as living in the US, instead of Pakistan.

When approaching teams and asking relevant questions, and they respond with hostility or contempt, you should treat this as an automatic red flag.

Partners & Backers:
Not all projects require VC investors. But despite their generally poor reputation in the space they provide a critical service function, crypto as we know wouldn't exist without them because the majority of the biggest projects you know, wouldn’t have been able to get off the ground in the first place.

On the flip side, by agreeing to a VC investment it often comes with terms the Project needs to adhere by. And will almost certainly mean a certain % of their token pool will be allocated to the VC who will seek to take profits at every opportunity, which is their business model and shouldn’t be condemned because they took the biggest risk in the first place. As part of a deal some VCs may insist on control elements to guide the Project where they want it to go, which may not always align with the original spirit and concept of the Project’s Founders.

Due to this some projects outright refuse VC investment to ensure a fair price for their community, and guarantee no outside influence can side-track the Project. In these Projects its usually mentioned in the documentation, probably as a ‘fair launch’.

Ecosystem partnership is a more tangible indicator of a solid project, especially those who collaborate to add value. When you see an ecosystem of service/product based collaborations like this, it’s often a good sign.

But, if there’re no Partners or Backers. Be cautious! Often this is a sign of scam project, or simply vaporware.

Roadmap:
The roadmap for me is always important, especially for a project in its nascent stage.

If the roadmap includes ‘pump’ campaigns, automatic red flag. A pump campaign is by rule of thumb a pump and dump. The team and selected community members/partners will drive a price pump, causing normal investors to FOMO (fear of missing out) in, then they’ll sell at an agreed point and the price will crash. There are just far too many examples of this happening, on a still regular basis.

The longer the roadmap the better. If a team is ambitious, it will often be reflected in the roadmap. Ambition is a good (but not certain) indicator of a team invested in the longevity & success of a project.

Now you don’t have to be a tech wizard but over time you’ll start to gain an understanding of what would constitute an achievable objective. If the roadmap seems too audacious and unrealistic, you should treat it as suspicious. Seek second opinions, speak to the team directly, then analyse your findings.

Tokenomics:
This may be the most comprehensive section of your research. I will break down into smaller sections the key points to look for in the tokenomics.

• Token/Coin Maximum Supply: Self-explanatory
• Circulating Supply: Now this could be important for the sake of token price. So, if the token is fully vested then any growth or loss may be organic. If only a proportion is released then it indicates over time more tokens will be released, which may inhibit a positive growth of the token price if done incorrectly, or if the demand doesn’t correlate with the token issuance. Most projects only release a portion of their tokens upon launch.
  Generally, L1 (Layer 1) or L2 (Layer 2) PoS (Proof of Stake) networks will be inflationary, issuing tokens every month to pay network node validator rewards, possibly for years or decades.
• Token Allocation/Distribution: This is to indicate where the tokens will be sent upon launch (or has been sent if already launched). This is very important information for young (less than 12 months old) or pre-launch projects, as this is one of the strongest indicators of economic sustainability, at least in the short to medium term. Keep an eye out for Team; Advisors; Private Sale/Seed; Partners; Strategic Investors (VCs). If collectively they add up to over 35% of the supply, it may be a cause for concern, as all of that liquidity could leave the project when unlocked. If the Team have allocated 20% or more to itself, then pay very close attention as it’s a possible indicator the team is concerned about their own revenue structure to ensure they get paid.
• Vesting Schedule: This is the other critical indicator of a potential scam or rugpull. If the Team allocation is fully vested on launch, major red flag. If the team, advisors, and private/seed sale all unlock and start vesting at the same time, this is a concern for potential supply dilution. A team building for the long term will often show this in the vesting schedule. But always remember, just because it says it, doesn’t mean it’s true (unless control of the vesting schedule has been relinquished to smart contracts). So, keep an eye on your other indicators too.
• The Token Utility: What is the purpose of the token? How does it operate and sustain the ecosystem? Are there a multitude of functions where using the token is required?
• The Breakdown and Distribution of Fees/Taxes: Now this is rarely disclosed, likely because it’s a variable rate, not fixed. But, if this information is available it’s a very useful tool to ascertain the likelihood of sustainability. If this information isn’t in the whitepaper, don’t be afraid to contact the team and ask them for the information (and suggest they include it in updated docs). Also, if the fee structure is too high (say more than 5% for transactions) then no matter how attractive the project looks, will people actually use it? And is there a Honeypot risk?
• Other Revenue Streams?: Does the project use a portion of investors' money to reinvest & generate more pipelines? For example, off-chain investments such as property, hedge funds, bonds; Or on-chain investments such as DeFi yield farms, leveraged assets etc?
• TVL (Total Value Locked): This isn’t easy to find out, unless the protocol has a data oracle linked to DeFi Llama (https://defillama.com/), or publish the information themselves on an application or their website, then you may require on-chain analysis to find this information out. But note that self-published information is easily manipulated unless implementing merkle trees to data integrity. This information is important, especially for a DeFi project. It basically states how much liquidity they have locked in right now to support their network/ecosystem. For a DeFi protocol this is perhaps the best indicator if the Project can sustain rewards when sell pressure increases (such as a bear market).
• Token Mechanics: In essence is the token deflationary? (a portion of tokens are either bought back by the network and taken out of circulation, or directed to a renounced burn wallet from tax/fee revenue (when paid in the native token) to reduce the supply and (potentially) increase the price if the demand remains the same or increases; Or is it inflationary? Can new tokens be minted? (this could be to ensure rewards are paid to network validators); Or maybe it’s neither, and its growth or loss are purely organic with a full fair launch?
  Very useful information to have, especially for long term investors.

Socials / Community Engagement:
Bad projects can often have amazing growth in price action driven purely by its community, like we’ve seen with meme tokens. So, look for socials such as Twitter; Discord; YouTube; and maybe others.

Gauge the number of followers they have, how active the community is, how the team interact with the community, what the level of engagement is from the team’s posts and announcements.

A strong community can sustain a project through a bear market. In fact, for bear markets a strong community of users may be the most important metric to consider.

There’re some projects who are purely for the community, otherwise known as memes. These should be treated as a separate class. As standard I never consider a meme project an investment, because without utility it’s purely speculation, thus gambling.

Listed Exchanges:
Your readers may be interested in buying, but where do they go to buy it? Which pairings have the deepest liquidity to minimise slippage loss? Which exchanges have the best volume?

How to Buy:
To follow on from where to buy, next is how? This is a very complicated process for people new to crypto, or simply new to DeFi and self-custody options outside of centralised exchanges.

If you’re doing your own content, just keep it as simple as possible. Do your guide as if the person you’re explaining it to is entering crypto for the very first time. Avoid the slang! Keep it simple, succinct, clear, and use step-by-step bullet points.

I also like to include information on how to access the DeFi opportunities which a project may offer, whether that’s Staking; Liquidity Pools (LPs); Yield Farming; Lending Markets etc.

Summary:
Here is where you post your opinions. List your pros and cons into more detail, highlighting the important parts. Put in your own recommendations for what you think the project could do better. Be careful with your language too, keep it professional because you never know who’s going to read it. Also be careful of outright saying you believe something IS a scam. Instead, say you believe the risk is very high and should only be considered with heightened caution.

My Rating: (out of 5, with 5 being the best) and here’s where I put my own personal rating. This is quantified by a scoring system I designed from the categories above.

Resources:
This is where I put all the resources I’ve used during my research process, such as website, docs, and 3rd party resources such as data aggregators, other research publications etc. This isn’t just for your own future reference, but also to help the reader understand where you source your research, and give credit to others where its due.

Important Note: Never include in your content a recommendation to buy or not buy… this can be construed as financial advice (no matter what your disclaimer may say). Instead, where appropriate I’ll say something like “I may invest in this”, or “I won’t go anywhere near this personally”. Just because crypto is still outside of clear regulations globally, it won’t always be the case. I firmly believe a lot of people are going to face criminal prosecution, and found liable in civil courts in the years to come.

And if you’re reading this sentence then I hope it’s because you’ve found this article useful. If so please leave your feedback, share, and follow me on X by clicking here.

Thank you.