The research process: how a professional actually decides
Amateurs research by reading whatever they find. Professionals run the same process every time, in the same order, designed to kill bad ideas as cheaply as possible.
Why order matters more than effort
There are thousands of tokens. You cannot analyse them all deeply, and you do not need to. The purpose of a research process is not to be thorough about everything. It is to spend five minutes killing ninety percent of ideas and five hours on the few that survive.
That means the cheap disqualifying checks go first. Reading a beautifully written whitepaper before you have checked whether the token unlocks eighty percent of its supply next quarter is wasted work.
The eight stages, in order
- Stage 1, existence check, two minutes. Does it have a working product with real users, or is it a promise? Is the contract verified? Is there a real website with named humans, or a template with stock photos? Most things die here.
- Stage 2, supply and unlocks, ten minutes. What is the fully diluted valuation against the circulating market cap? When do tokens unlock and how many? A large gap plus imminent unlocks is a structural headwind no narrative overcomes.
- Stage 3, who owns it, fifteen minutes. Read the top holders on the explorer. If ten wallets hold sixty percent, you are not buying an asset, you are a counterparty to whoever holds it.
- Stage 4, does anyone use it, thirty minutes. Real usage numbers: active addresses, transaction counts, total value locked, revenue. Compare against six months ago, not against the peak.
- Stage 5, does it earn anything, thirty minutes. Does the protocol generate fees, and does any part reach the token? Many tokens with genuine usage capture none of it.
- Stage 6, the competitive picture, one hour. Who else does this, are they bigger, and why would anyone choose this one? Being first matters far less than being where the liquidity is.
- Stage 7, the team and the code, one hour. Are they identifiable, have they built anything before, is development ongoing or abandoned?
- Stage 8, write the thesis and the kill criteria. One page. What has to be true, what would prove you wrong, and what would make you sell.
Kill criteria: reasons to stop immediately
The two failure modes that cost people the most
Confirmation gathering. You have decided, and now you are collecting reasons. The tell is that you only read bullish sources and treat criticism as trolling. The cure is mechanical: before buying, write down the strongest bear case in your own words. If you cannot make it convincingly, you do not understand the asset well enough to own it.
Narrative substitution. You cannot evaluate the technology, so you evaluate the story instead. Stories are cheap to produce and expensive to believe. A story is a reason to look, never a reason to buy.
What professional research is not
- It is not reading the whitepaper first. That is stage 7 work at stage 1 cost.
- It is not asking the community. Every holder is talking their own position, including the sincere ones.
- It is not counting Twitter followers. Followers are purchasable and engagement is farmable.
- It is not finding a price target. Someone else's target tells you nothing about their assumptions or their position.
- It is not being early. Early into something bad is worse than late into something good.
Keep a file
One document per asset you seriously considered, including the ones you rejected and why. In six months you will be able to check whether your reasoning was right, which is the only way research skill improves. Most people never do this and therefore never find out whether their process works.
BEFORE YOU MOVE ON
Common questions
How do I research a cryptocurrency properly?
Run the cheap disqualifying checks first: product existence, supply and unlock schedule, holder concentration. Most ideas die there. Only then spend hours on usage, revenue, competition and the team, and finish by writing a thesis with explicit kill criteria.
What should make me reject a token immediately?
An unverified contract, over half the supply unlocking within a year, top ten wallets holding most of the supply, no product after eighteen months, or any guaranteed return language.
Should I read the whitepaper first?
No. It is expensive to read properly and easy to write persuasively. Check supply, unlocks and holder concentration first, since those kill most ideas in minutes.
Risk warning: crypto is highly volatile and largely unregulated. You can lose everything you put in. Nothing here is financial, investment or tax advice.