Understanding DYOR: Research like a pro crypto investor

There are a lot of bad actors out there trying all they can to get their hands on your hard earned money. And some of them are unfortunately very smart and increasingly creative. Knowing this, we have to remember what all MMA referees say before fights start “Protect yourself at all time”. In this article we will dive into how you can protect yourself, and be a smarter investor.

UFC referee Herb Dean about to stop the biggest fight in MMA history between Khabib Nurmagomedov and Conor McGregor.

In today’s post, we will dive into the acronym DYOR, which stands for “do your own research.” You might have encountered this phrase in the cryptosphere before, or this might be the first time you’re seeing it. Either way, we aim to clarify what DYOR means and why it’s significant for investing, particularly in cryptocurrencies. If you’re looking to avoid beginner mistakes, this is a good place to start. 

As the steps are outlined, it’s crucial to have the project’s website open. In other words, capture the site in a new tab and keep it handy. Think of the website as your first impression. Does it appear clean and professional, or is it full of typos, poorly organized content, and overall lack of effort?

A well-designed site doesn’t guarantee success, but it certainly helps. Beyond the website, look for the project’s white papers. These documents are where the team lays everything out clearly, explaining the problems they’re tackling and why their solutions matter. If the white paper is filled with buzzwords or unrealistic promises, it’s a clear red flag worth noting.

Start with their website, and listen to your gut feeling while you look at the website

Now let’s move on to the people behind the project. A solid team is everything. Who are they? What is their background? You will want to conduct further background research on them, such as reviewing their LinkedIn profiles, Googling their names, and examining the previous projects they have worked on. If they have a history of fulfilling their commitments, that’s a positive indicator. However, if you struggle to find their names, you might want to reconsider your investment decision.

Also, investigate partnerships and backing. Are they claiming connections to prominent companies or reputable investor firms? Don’t take their word for it—verify their statements. If you find reputable evidence for claimed partnerships, that’s reassuring. If you come across nothing or the partnering companies have no association with them, you know what to do.

Another vital area is social media and community channels. Check their activity on X, Discord, or Telegram. Do they have active accounts? Are they actually responding to or addressing people’s questions and concerns? A community that is smart, actively participating, and curious is certainly a good sign. If it’s only hype with no substance, or team members appear unresponsive, that raises a serious red flag.

Many projects have a dedicated webpage showcasing their team, partners and backers.

And then there’s the market data. Visit CoinMarketCap or CoinGecko to review statistics like market capitalization, trading volume, and liquidity. A token with strong trading volume and liquidity allows for easier buying or selling without significantly impacting the price. Conversely, low liquidity or irregular price movements may signal underlying issues. Pay close attention to supply figures—circulating supply, total supply, and maximum supply. Understanding the number of tokens in existence and their distribution can provide insight into potential inflation risks and the asset’s long-term value. I know this is a lot to take in, but trust me, you will get used to it. 

Finally, let’s discuss security. For tokens on decentralized exchanges, confirm whether their liquidity is locked. Locked liquidity significantly reduces the likelihood of rug pulls, where developers withdraw funds and leave investors with worthless tokens. Additionally, remember to use tools to detect “honeypots.” If something seems suspicious, steer clear. Caution is also warranted for tokens not listed on reputable exchanges or unsupported by trusted wallets. Tools and websites like www.moralis.com can help you with this. 

At the end of the day, doing your own research means being meticulous and demanding thorough, clear information on every detail.

Ultimately, the phrase “do your own research” refers to being cautious and methodical. You don’t need to be an expert in blockchain technology to identify a good opportunity from a bad one. Every successful investor understands the importance of making informed decisions combined with a healthy degree of skepticism—that’s what sets them apart from the crowd mindlessly following trends. Simply put, investing isn’t just about gut feelings; it requires careful analysis and thoughtful strategy. That’s why the saying “DYOR” remains so relevant.