FOLLOW THE MECHANISM
- 1Specify
Name chain, version, contracts and dated references.
- 2Trace
Map assets, receipts, debt, fees and reward payers.
- 3Test the story
Consider failures and exit conditions.
- 4Document uncertainty
Separate verified facts, assumptions and unanswered questions.
A conceptual sequence. Real implementations can add steps, intermediaries, and conditions.
Identify the exact system
Start with the chain, contract version and market or pool being described. A historical whitepaper can explain a design while current deployed code uses different parameters or extensions. An interface can route across several contracts and charge its own fee. A token symbol is not a unique identifier. Record the source date and distinguish a roadmap, a test environment and a production deployment. This is especially important when documentation contains several protocol generations side by side.
Build a plain balance sheet
List the assets entering the system and what the user receives: a token, a share, a debt balance, voting power or a contractual promise. Name the party or contract holding each underlying asset. Then trace where every reward originates and who pays every fee. A receipt is generally a claim on existing resources rather than additional independent backing. Use separate lines for quantities and prices, so a larger token balance cannot silently become a claim of higher purchasing power.
Read permissions and exits
Find who can change parameters, upgrade contracts, pause actions or authorize minting and withdrawals. Check whether governance votes execute automatically, require an administrator or can be bypassed by an emergency role. Follow the exit under normal conditions and under stress: queues, insufficient cash, unavailable data, oracle outages or bridge failure. A timelock and an audit are useful only when their exact coverage is known. The question is what the deployed mechanism lets each participant do.
Reconcile claims with evidence
Compare mechanism documentation with code references, parameter records and independent research. Treat promotional statements as the project’s interpretation rather than independent evidence. A yield number needs its asset, period, fee treatment and compounding assumptions. A reserve number needs liabilities and ownership context. If a critical fact is unavailable, mark it unknown rather than substituting a confident adjective. The goal is not a token ranking; it is an explanation another reader could follow and challenge using the same sources.
MAKE IT CONCRETE
An illustrative claim unpacked
“Earn 8% on a wrapped staking token” leaves open the source of the 8%, the token-price assumption, the wrapper’s redemption path, borrowing exposure and fees. A complete explanation resolves those components before using the percentage.
FAILURE PATHS & COMMON MISREADINGS
Where the model can break
- Documentation for another version may describe the wrong control rules.
- A missing fact should remain an explicit unknown.
KEEP EXPLORING