Thanks for the helpful write up. I just have a couple of questions:
1) What analytical tools would you recommend someone use if they are looking to research tokens and projects such as Onchain tools, social etc, esp. for someone not currently working in the industry?
2) If we want to write a memo on an interesting token or project, what are the essential things that we should cover in that memo?
1. Frankly I use more tools than I can list here, but I'll try to list the best ones. Crypto data is still pretty fragmented and there is no all in one "bloomberg" type solution yet.
- Dune analytics is great for anything on-chain, whether that is deep diving a particular project or finding out what people are doing on-chain
- DeFiLlama has a wide range of helpful and free data on DeFi and Layer 1's
- Artemis.xyz is another data provider that has great on-chain and developer activity metrics
- Arkham intel is great for wallet tracking (i.e. see what certain token holders are doing)
- Coingecko for basic token price and market cap/fdv data
As far as social goes, Crypto Twitter can be helpful but you have follow the right people. It can be a good place to source investment ideas (especially if you don't work in the industry and are short on time) but I would always suggest doing your own research before buying anything.
2. Depends on the project but at the very least, an overview of what it does, what problem it solves, investment merits and risks, competitive analysis (how does this project stack up in terms of tech, usage, valuation, etc vs its peers), and a detailed overview of the token (with emphasis on distribution, future inflation, and utility mechanisms such as control over fee revenue, staking, payment of transaction fees, etc). Finish it off with an investment thesis.
If you want to go deeper, I also typically analyze the leadership team, project security, the broader industry (especially if the project is attempting to disrupt centralized incumbents), developer/contributor activity, governance structure and robustness, any regulatory risks, total addressable market, and perform a valuation analysis of the token when possible (think DCF but sometimes you have to get creative). The relevance of each of these depends on the particular project I'm looking at. For example, regulatory risk would be a lot more important to look at for a platform like dYdX than Bitcoin.
Fantastic. Thank you for the fantastic and detailed answer and post. This is really the best post I have seen on the internet about being a crypto analyst and how to become one. Thanks again Mike.
Sure, in short, it is a research template that essentially covers most, if not all of what you need to have a solid understanding of a particular crypto project. This includes stuff like the basic project background, problem it is attempting to solve, technology overview, token utility, governance, project treasury/fundraising, team overview, etc.
It's nothing crazy insightful if you consistently read the deep dives on DeFi Education, but certainly helped me know what to look for when I was starting out my research analyst career.
Thanks again! It was a pleasure doing the post. Once again happy to answer any questions I can down here.
Hi Mike,
Thanks for the helpful write up. I just have a couple of questions:
1) What analytical tools would you recommend someone use if they are looking to research tokens and projects such as Onchain tools, social etc, esp. for someone not currently working in the industry?
2) If we want to write a memo on an interesting token or project, what are the essential things that we should cover in that memo?
1. Frankly I use more tools than I can list here, but I'll try to list the best ones. Crypto data is still pretty fragmented and there is no all in one "bloomberg" type solution yet.
- Dune analytics is great for anything on-chain, whether that is deep diving a particular project or finding out what people are doing on-chain
- DeFiLlama has a wide range of helpful and free data on DeFi and Layer 1's
- Artemis.xyz is another data provider that has great on-chain and developer activity metrics
- Arkham intel is great for wallet tracking (i.e. see what certain token holders are doing)
- Coingecko for basic token price and market cap/fdv data
As far as social goes, Crypto Twitter can be helpful but you have follow the right people. It can be a good place to source investment ideas (especially if you don't work in the industry and are short on time) but I would always suggest doing your own research before buying anything.
2. Depends on the project but at the very least, an overview of what it does, what problem it solves, investment merits and risks, competitive analysis (how does this project stack up in terms of tech, usage, valuation, etc vs its peers), and a detailed overview of the token (with emphasis on distribution, future inflation, and utility mechanisms such as control over fee revenue, staking, payment of transaction fees, etc). Finish it off with an investment thesis.
If you want to go deeper, I also typically analyze the leadership team, project security, the broader industry (especially if the project is attempting to disrupt centralized incumbents), developer/contributor activity, governance structure and robustness, any regulatory risks, total addressable market, and perform a valuation analysis of the token when possible (think DCF but sometimes you have to get creative). The relevance of each of these depends on the particular project I'm looking at. For example, regulatory risk would be a lot more important to look at for a platform like dYdX than Bitcoin.
Fantastic. Thank you for the fantastic and detailed answer and post. This is really the best post I have seen on the internet about being a crypto analyst and how to become one. Thanks again Mike.
That's awesome to hear. Appreciate the comment.
You mentioned a research framework from Messari, can you expand on what that looks like?
Thanks
Sure, in short, it is a research template that essentially covers most, if not all of what you need to have a solid understanding of a particular crypto project. This includes stuff like the basic project background, problem it is attempting to solve, technology overview, token utility, governance, project treasury/fundraising, team overview, etc.
It's nothing crazy insightful if you consistently read the deep dives on DeFi Education, but certainly helped me know what to look for when I was starting out my research analyst career.
This is great, thanks for the share!
Any suggestions on breaking into web3 through copywriting/marketing angle?
I have a decent copywriting background and wonder what else I should learn to be more competitive?
Thank you