Researching the team's credibility, reviewing the project roadmap, and auditing the project's smart contracts could be a good way to start out basic analysis in DeFi. Users, especially newbies should take note of this fundamental approach to analyzing DeFi projects.

Research Team's Credibility

Usually, a project's ability to succeed depends on the caliber and strength of the team. A DeFi project led by an experienced team is more likely to thrive. Investors should carefully scrutinize the founders, developers, advisors, and key officials, considering their past records and industry prominence before investing.

Smart Contract Audits

Vulnerability with DeFi projects due to smart contracts usually comes off easily. To find and stop possible security breaches, it is essential to make sure a project is subjected to an independent, and trustworthy security audit.

Review Project's Roadmap

Analyzing a DeFi project's roadmap provides insight into its goals and how it plans to achieve them. A clear timeline of the project’s development and milestones instills confidence in investors regarding the project's commitment to its objectives. Most often, these road maps are usually embedded in their official website. Some other times, a few projects could expound on it in their white papers. Solana seems to have a good road map and will most likely be among the top DeFi projects contending with Ethereum. Here's a display of its ecosystem and how massive it's becoming.

Evaluate Community Strength

This is one of the basic indicators to also look out for. Of course, it may not always be a yardstick but it counts many times. A project's community strength and support reflects its adoption rate, viability, and future growth. A strong and active community is indicative of a sustainable project, while poor community strength can be a red flag. Leveraging social media platforms helps gauge community sentiment.

Assess Governance and Decentralization Model

DeFi projects often have governance tokens for user participation. Evaluating decentralization levels and power distribution among token holders is vital. Projects with strong community governance tend to have a more sustainable future. Recently, users are more attracted to projects that give incentives to their community, such as airdrops. In some cases, users may be less likely to think that the project owners are frauds since they willingly share value from the project with them.