S17: Doing Due Diligence on the web
How to keep a good safe structure online
NEWS
US Federal Reserve printed $300bn to help US Banks after the failure of Silicon Valley Bank & Signature
the US central bank started printing to rescue cash-trapped banks after the collapse of Silicon Valley Bank & Signature Bank. US banks have borrowed a combined $164.8 billion from the US Federal Reserve.
The Federal regulators or agencies were provided $142.8Bn to manage the two banks.
this money printing is done to bail out the US Banks from collapse and to avoid Bank run.
Some crypto OGs, specifically Authur Hayes believes that the move has put the US Banks in a deeper crisis because Banks are $2.2Tn underwater on their bond portfolios which worsens the risks of US debt default & recession
Euler Finance, a lending protocol on ETH was hacked and exploited for $196m
Euler was audited 10 times between May 2021 & Sept 2022 by different auditing institutions and they all ranked the protocol as low risk.
Euler was exploited by flash loan, the CEO however posted a $1m bounty on the hacker if he doesn't return 90% of the money, which means the CEO offered the hacker $20M to return the balance. however, 1hour after that announcement, the hacker started moving the money via a crypto mixer on tornado cash.
Meanwhile, BlockSec prevents a $5M Hack on NFT Lending Protocol ParaSpace.
ParaSpace is a lending protocol that allows users to lend their NFTs and ERC-20 tokens to earn interest in return. users can also use the lent asset to borrow from the platform.
a hacker spotted a vulnerability in the platform smart contract, that will allow him/her to borrow from the platform with lesser NFT & ether than is required but the first attempt of the borrow failed due to insufficient gas fee.
Credit Suisse Crisis;
while Silicon Valley Bank was failing in the US due to $110bn. Swiss Central Bank Credit Suisse was failing in Europe.
Credit Suisse Bank is a European bank that has assets of more than $550bn. they were hit by a series of external & internal frauds, as well as failures of hedge funds and capital firms.
over a decade ago, they lose the vote of confidence of investors and customers, so they made a strategy change by changing the CEO in 2011, but still, they continue to hit deficits. and now their biggest investor which is Saudi National bank refuses to give them the $50bn requested, this has led to them selling off bank shares and it tanked their value by 30%.
people are asking questions, what happens to the wider financial banking system if this fails?
LET'S GET STARTED
you must have heard of DYOR "Do Your Own Research". when many people hear do your own research. they strongly believe it means just google it and if it brings result from any platform then it is good, then you act on it. CAPITAL NO
Many project have been seen to be healthy because they are able to do a lot of community service. they buy houses, support less priviledges, visit law enforcement agency, these are unique ways to keep your mind busy and distract you from actually doing due diligence.
if it involves money, take your time to know about it.
Do your own research or doing due diligence online means take time to research, analyse your result, validate and expand it. which brings us to RAVE Model.
Why is due diligence important
Imagine investment global went away with N22Bn
Ovaiza farm produce storage business ran away with billions of Naira
MBA fled with billions of Naira
BitConnect went away with Billions of $
and many more.
RAVE Model
Research: research about a said project
Analyse: Analyse the result of your research by drawing a check list
Validate: Validate that they are who they say they are and they are true to what they want to do
Expand: Draw a conclusion and expand on it.
3 types of Due Diligence
legal due diligence
financial due diligence
commercial due diligence
3 P's of due Diligence
People
Process
Performance
What do you research about
Online Presence
Project Ideology
Team dedication, Presence & Accessibility
Support
License & Disclaimer
Regulation Guideline
Checklist for doing due diligence
check that they are online
check that they put their team online
check that their team have online presence
check that their team talk about the business or project
check that they provide customer support
take time to test out the customer support
check that the team understand the project they are selling.
check the model or business process.
don't be afraid to ask questions.
Test their accountability
Conclusion
it is important that you as a business owner should put in place trust factors that will help your potential customer know the legitimacy of your business.
it is important for you as a customer or investors to take time to do due diligence before you engage any form of business.
because the pain is much, but you will have to deal with it.
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