Get answers to the most frequent questions about white papers, tokenomics analysis, due diligence, red flags, and safe crypto investing. From beginner to advanced.
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White Papers & Documentation
Top 7 red flags I check in every white paper:
- No clear problem statement – If they can't articulate the problem in 2 sentences, skip
- Vague token utility – "Governance token" without specific voting rights
- Anonymous team – No LinkedIn profiles or real identities
- No audit report – Or audit older than 18 months
- Unrealistic roadmap – "Q4 2025: World domination"
- Copy-pasted code sections – Check with Token Sniffer
- No liquidity lock details – Or lock < 1 year
My 3-phase approach:
- Phase 1 (3 min): Skim first 3 pages - problem, solution, team
- Phase 2 (7 min): 8-question checklist (token utility, roadmap, audit)
- Phase 3 (5 min): Deep checks (liquidity, social proof, on-chain)
Total: 15 minutes for due diligence. If it passes, then 45-60 min for deep analysis.
Vague utility examples I see daily:
- "Token holders can vote" → But no voting platform or specific rights
- "Token used for fees" → But fees are 0.1% and token has 1B supply
- "Access to premium features" → No clear feature list or pricing
- "Revenue sharing" → No % specified or distribution schedule
Good utility examples:
- "Token holders vote on Treasury allocations (>10k tokens required)"
- "50% of protocol fees buy and burn token weekly"
- "Stake token to earn 30% of validator rewards"
Always start with the litepaper (if available):
- Litepaper: 5-10 pages, business case, target market, token basics
- Whitepaper: 20-50 pages, technical details, math proofs, architecture
- Technical paper: 50+ pages, academic style, algorithms, formal proofs
My workflow: Litepaper → Whitepaper (skip math) → Technical (if investing >$10k)
Tokenomics & Economics
My rule of thumb for new projects:
| Token Type | Reasonable Supply | Red Flag |
|---|---|---|
| Utility Token | 100M - 1B | >10B (inflation risk) |
| Governance Token | 10M - 100M | >500M (voting dilution) |
| Meme Coin | 1B - 100B | >1T (mathematically problematic) |
Key metric: Fully diluted valuation (FDV) should be < 20x current market cap for projects < 2 years old.
My 4-point unlock checklist:
- Team/VC unlocks: Should be ≥ 18 months, linear not cliff
- Community unlocks: ≤ 5% per month post-TGE
- Next major unlock: > 30 days away (avoid impending dumps)
- Circulating supply: > 40% of total (avoid high inflation)
Use Token.Unlocks or CoinMarketCap unlock calendar for verification.
Critical distinction many miss:
- Circulating supply: Tokens actually trading now
- Total supply: All tokens that will ever exist (including locked)
- Max supply: Absolute maximum (if capped)
Red flags:
- Circulating/total < 30% = high inflation risk
- Market cap based on circulating, FDV based on total
- If FDV > 10x market cap = massive dilution coming
Due Diligence & Analysis
My exact checklist (downloadable on Resources page):
- Problem/Solution (2 min): Clear? Novel? Needed?
- Team (3 min): LinkedIn? Experience? Previous projects?
- Tokenomics (4 min): Utility? Supply? Unlocks? Inflation?
- Technical (2 min): Audit? GitHub activity? Open source?
- Market (2 min): Competitors? TAM? Traction?
- Community (2 min): Twitter/Discord? Engagement? Sentiment?
Each category gets 0-2 points. Projects with < 8/12 points I skip.
My verification process:
- LinkedIn: Profile age > 2 years, endorsements, previous companies
- GitHub: For devs - commit history, repo stars, contributions
- Previous projects: Search their names + "crypto" or "blockchain"
- Twitter: Account age, follower quality (not just bots)
- Cross-reference: Same person across multiple platforms
Red flags: New social accounts, no face photos, generic bios, no previous crypto experience.
Patterns I've documented from 50+ rugs:
- Liquidity unlock < 1 year (often 30-90 days)
- Team tokens unlock early (within 3 months)
- Copy-paste website (change names only)
- Anonymous team + KYC service (paid verification)
- No multi-sig wallet (single EOA controls everything)
- "Stealth launch" marketing (avoids scrutiny)
If 3+ of these match, probability of rug > 80% in my data.
Security & Wallet Safety
My 5-step contract check:
- Audit report: From reputable firm (CertiK, OpenZeppelin, etc.)
- Audit age: < 18 months (outdated audits = red flag)
- Contract verified on Etherscan/Solscan
- No proxy patterns unless clearly documented
- Owner privileges: Minimal, time-locked, multi-sig
Tools: Token Sniffer, DeFi Safety, RugDoc (for DeFi protocols)
This is a CRITICAL red flag:
- Owner can create infinite tokens → hyperinflation → your tokens worthless
- Even with locked liquidity, they can mint → sell → crash price
- Often hidden in proxy contracts or "upgradeable" logic
How to check:
- Look for `mint()` function in contract
- Check if onlyOwner or has mint role
- Verify if mint function disabled or capped
- Check if owner is time-locked or multi-sig
My tiered approach:
- Tier 1 (Ledger/Trezor): Long-term holds, >$1000 value
- Tier 2 (MetaMask burner): New tokens, testing, <$200
- Tier 3 (Exchange): Trading only, never hold long-term
For new/experimental tokens: Always use burner wallet. Even if contract malicious, they only get the dust amount.
Investment Strategy
Based on risk profile:
- Conservative: 1-3% (age 50+, near retirement)
- Moderate: 5-10% (age 30-50, established career)
- Aggressive: 15-25% (age 20-30, high risk tolerance)
- Professional: 30%+ (full-time crypto, deep experience)
Never invest emergency funds or money you can't afford to lose 100%.
My position sizing rules:
- Established coins (BTC/ETH): Up to 5% of crypto portfolio each
- Large caps (top 50): 2-3% max per project
- Mid caps (top 100): 1-2% max per project
- Small caps (top 300): 0.5-1% max per project
- Micro caps/new launches: 0.1-0.5% only
Example: $10k crypto portfolio → $50-100 max on a new token launch
My 5 sell signals:
- Fundamentals changed: Team leaves, roadmap abandoned
- Target reached: Hit 2-5x, take profits (at least 25%)
- Better opportunity: Found project with 10x more potential
- Portfolio rebalance: Crypto > target allocation %
- Time limit expired: No progress in 12-18 months
Have an exit plan BEFORE you buy, not when panic selling.
Technical Analysis
My simplified toolkit:
- Volume profile: Identify support/resistance levels
- RSI (14): Overbought (>70) vs oversold (<30)
- EMA ribbons: 9, 21, 50, 200 EMA for trend
- On-chain: Exchange flows, whale movements
- Market structure: Higher highs/lows vs lower highs/lows
Avoid: 10+ indicators on one chart. Creates analysis paralysis.
Start with these 3 metrics:
- Exchange netflow: More to exchanges = selling pressure
- Whale transactions: >$100k movements (watch for patterns)
- Active addresses: Growing = adoption, shrinking = interest fading
Free tools: Glassnode (free tier), Santiment, CoinMetrics
Beginners & Getting Started
For absolute beginners:
- $50 BTC - Store of value, lowest risk
- $30 ETH - Platform, DeFi/NFT exposure
- $20 stablecoin - USDC on Celsius/BlockFi for interest
DO NOT: Put first $100 into random meme coins or new launches.
Top 5 mistakes I made (so you don't have to):
- Chasing 100x: Start with 2x, then 5x, then maybe 10x
- No exit plan: "I'll sell when it moons" → bags at -80%
- Listening to Twitter shills: Verify everything yourself
- Day trading with >10% portfolio: 95% lose money day trading
- Not taking profits: Greed destroys more accounts than anything
Realistic learning schedule:
- Week 1-4: 10 hrs/week - Basics, wallets, exchanges
- Month 2-3: 5 hrs/week - White papers, tokenomics
- Month 4-6: 3 hrs/week - Due diligence, on-chain analysis
- Ongoing: 2-3 hrs/week - Stay updated, portfolio review
Quality > quantity. 2 focused hours better than 10 distracted.