DYOR is the mantra of the crypto world, chanted in every Discord or Telegram group and etched into the DNA of every seasoned investor. The acronym stands for “Do Your Own Research” and serves as both practical advice and a warning for everyone navigating the complex crypto space.
The project could be the best crypto, but it’s still recommended to dig into its details and understand how it works before parting with cash.
Think of DYOR as taking charge in an industry where information is everywhere, but not always reliable. The term originated in the early days of crypto, and gained popularity around 2017 during the ICO frenzy, at a time when Bitcoin was old news, and altcoins emerged faster than you could say ” blockchain”. Platforms like Reddit and Bitcoin became a breeding ground for DYOR, with seasoned investors urging newcomers to take a closer look at every shiny new token.
And as ICOs ranged from legit to laughable, DYOR became a reliable method to sift through the noise and tell robust projects apart from those that are all hype. So, before you see that crypto price prediction and put your money on the line, take a deep breath and remember to do your research first. You’ll thank yourself later for doing that.
Practical Steps to Research Crypto Projects Before Buying
You may wonder why you should even do your own crypto research when you could instead follow the advice of experts and influencers. Well, to put it simply, crypto is unpredictable, and since there are plenty of weak projects out there, let’s just say you can’t know when the advice of an Instagram crypto influencer ends up being not so good after all.
By doing your own research, you’ll give yourself the chance to make better choices and avoid unnecessary risks. Let’s have a look at the steps you can follow:
Read the Whitepaper of The Project
A whitepaper is the first signal that a crypto project is serious, as it’s designed to explain the problem the project aims to tackle, how its technology works, what the token is for, and the future roadmap.
You will spot a good whitepaper by the way it spells out all the details with clarity, and dives deeply into the technical aspects to be checked later. If, on the other hand, you come across a whitepaper that’s too vague and stuffed with buzzwords, this is a red flag, and you should likely look for another project.
Evaluate the Project’s Development Team
After you’ve read about the paper, the next thing to look at is who’s behind it. A legitimate project generally has team members with prior experience and expertise in blockchain; for instance, Polygon’s team profiles showcase past roles and relevant experience in scaling the technology.
On the opposite side of the spectrum, projects with anonymous teams can be quite dubious. Take, for instance, the Squid Game token, which aimed to leverage the Netflix show that became a hit. The project quickly proved worthless and fraudulent, which is why it’s imperative to check official websites, LinkedIn profiles, and verified project histories to identify legitimate teams.
Analyze Tokenomics
Tokenomics is about how a token is designed, distributed, and used in the project’s economy. When studying the tokenomics of a crypto project, you want to understand how many tokens are available now, how many will exist in the future, and who controls them.
Be sure to monitor allocation and vesting schedules as they can show when team members or early investors might sell and also study what drives demand for the specific token you’re assessing. If you notice that too much is concentrated in insiders’ hands or unlocks are occurring too quickly, keep in mind that this can put pressure on the price later.
Understand the Use Case and Value Proposition
Any valuable crypto project should solve a real problem. If it doesn’t, that should ring alarm bells. As you do your research, ask yourself what the project can do better compared to other alternatives, and who can benefit from it? Maybe it’s adding privacy or lowering transaction costs. Or maybe it’s making things more secure or faster.
Then, consider whether people will want to use it and whether its use will ultimately support the token. Suppose it has vague benefits or no clear purpose; this shows that the foundation of the project is weak, and there’s nothing you could gain from engaging with it.
Check the Community
A strong, engaged community is also a signal that a project is legitimate. Assess the quality of discussions on Discord, Telegram, or X, and see whether they are asking good questions, engaging in real conversation, and sharing ideas. For instance, Ethereum has built a vibrant community that actively discusses the latest network upgrades, ecosystem improvements, and technological advances.
On the other hand, overly speculative projects rely mostly on hype and aggressive promotion but lack genuine community discussion. Keep in mind that large follower counts aren’t very relevant when assessing the community, because paid followers or bots are very common in the crypto space, which is why you should focus instead on how the team communicates with the community as well as how they respond to criticism or feedback.
Evaluate Market Metrics
Numbers also tell you a story about the project’s viability, so look at the daily trading volume, market cap, and liquidity on crypto exchanges. Robust projects trade on various exchanges, including DEXs, ensuring there’s enough liquidity for everyone to buy and sell without the token experiencing large price swings.
Check the token’s current market cap and compare it with its fully diluted valuation, as this will give you an idea of the impact of future supply. Also, don’t forget to verify if the project is currently generating usage or revenue, which you can do through dashboards that monitor transactions, fees, or total value locked.
DYOR Is Your Best Ally in the Dynamic Crypto Space
There’s a reason DYOR has become the golden rule of crypto investing. Researching a project isn’t about chasing hype; it’s about building habits that ensure you stay grounded. Rather than relying only on what the headlines say, you dedicate your time to digging into all fundamental aspects of a project, so that you can separate those that are sustainable from the ones that are nothing but noise.
Ultimately, this will help you protect your capital and identify the projects with the best shot at long-term success.
