Along with the increasingly rapid development of the cryptocurrency market, many Crypto projects have been launched in the market. However, in addition to quality projects with a lot of potential for development, many low-quality and scam projects still exist in parallel. Therefore, to invest in the right project, you need to research methods to get a lot of profit, and the most popular and correct method is DYOR.
To help you better understand this term, we wrote an article to introduce DYOR to everyone. The article talks about the concept, characteristics, and effective DYOR. Read the article to learn more about DYOR.
What is DYOR?
DYOR is an acronym for “Do your own research.” It is about research skills, that is, and you need to research a problem yourself; you receive them through the media or someone.
This term is commonly used in many areas of life. In the Crypto market, DYOR is the steps to analyze a project before investing, done by investors themselves so that they can make the best decisions about whether to invest in the project or not.
DYOR encourages users not to follow other people’s recommendations uncertainly to reduce the number of uninformed investors. Regardless of your interest in any new project in the field, you must carefully consider it before investing to avoid unnecessary property loss.
The term DYOR appeared from 2016-2017 when ICOs and pump-dump games flooded the market. But, it was not until 2022, the year when a series of large entities such as Luna, FTX, Alameda, etc., went bankrupt because of their shady tricks behind the curtain that DYOR really became popular and loved by many people use.
DYOR is used in Crypto as a warning to investors about disclaimers. Authors use DYOR to warn us not to trust their information immediately. When you read sources with DYOR warnings, do your own research and verify the information, and you will be solely responsible for your investments.
How vital is DYOR in crypto?
With the rapid development of social networks, when a project is launched, there will be a lot of media coverage. An effective form of promotion for the project is to receive good reviews from experts, KOLs. In parallel with the quality promotion information, there is also quite a lot of fake news.
There are experts and KOLs with a broad vision, expertise, and sincerity in giving information. But there are still experts, KOL has received money from the project to shill, or they have bought the project’s token and expect it to increase in price; they write well even though the project is of very poor quality.
Two common scams to entice investors:
- Shilling is a common action in the Crypto market; people will focus on advertising and saying good things about their coins in order to gaslight investors so that they can buy those coins. To increase their value. The bad guys have a lot of ways to advertise the coin, such as creating many virtual accounts to create a FOMO effect to trick savvy investors.
- Sybil attacks are also quite common nowadays on Reddit, Twitter, and Facebook. Bad people will create many fake accounts and post posts on the platforms to entice investors to buy cryptocurrencies. Detecting fake accounts is not always easy.
Not all investors are sober enough and control their greed to avoid falling into the trap of the bad guys. Therefore, you need to DYOR and filter potential projects so as not to rely on fake information and investment manipulation of groups.
Therefore, DYOR is important for investors, as they largely determine whether your investment can be profitable and help you avoid scams.
How does DYOR work?
After reading the information above, you already know the importance of DYOR, right? Now let’s learn some DYOR methods.
Analysis of social media channels
Social media analytics is about understanding how projects develop in social media channels. It is the easiest start for you in reviewing a project. By monitoring the project’s channels, you will know if the project is active or not, whether the project is interacting with the community, and whether the project is of interest to the community.
Crypto projects are popular in many social networking channels, and each project will have Twitter, Telegram, Discord, Discord, Youtube, and Facebook channels,…but we should only focus on three main channels: Twitter, Telegram, and Discord,… these are the three channels that often post information about products, features, and information of cryptocurrency projects.
- Projects often build their own Twitter channel to post project information about new feature releases, product launches, community events, contests, etc. You can follow the project’s Twitter channels to see if the project is developing well and learn more about the project’s new information through Tweet posting density and Tweet content. Please evaluate whether the project regularly posts, whether they regularly update according to the roadmap, whether the project attracts investment capital, and whether the community interacts and cares a lot about the project or not.
- Some of the most influential people in the industry, such as CEOs of exchanges, KOLs, CEOs of large projects and investment funds, etc., that you trust and appreciate for their expertise and honest opinions about potential projects.
- Twitter also supports you with some useful features so that you can easily find information. Optimized search feature by adding “#” or “$”; when you type these characters before the project/token name, you will see community posts about the project or feedback—their response to the news. The “List” feature, to get the most complete information about the projects, must follow many Twitter pages of the project. If you have too many things to follow, use the ” List” to create a list of topics of interest and add the corresponding Twitter accounts.
- Some projects also organize events such as AMA, Giveaway, and Contest, …on Twitter to attract the community to participate in the project; you can also participate in these events to earn an extra amount of money. Additionally, for the AMA event, some projects will allow you to submit questions about their projects, and they will respond to you through the AMA live.
Telegram
- Telegram is a project channel often used to interact with the community through chat and to announce events to the community. You can join the project’s telegram channel to see if the project regularly interacts with the community, responds to project questions in the chat group, and whether the project is interested in feedback. But, Telegram is easy to buy “virtual participation”, Therefore, when joining the project’s groups, you should pay attention mainly to the interaction and chat in the group.
- Moreover, to the Telegram channel of the projects, the teams or influencers also set up Telegram groups to share the information they research, such as information about shark wallets, emerging trends, and important news of the market…You can join these groups for reference about potential projects.
Discord
- Similar to Telegram, Discord is a place for the project to exchange and interact with the community. This is free software for the gaming community, and Discord has dedicated crypto servers where people can talk about cryptocurrencies with each other.
- The Discord groups you should join are the group of the project you are interested in and the group of reputable people to hear their news and reviews on potential projects.
- To find a reputable Discord channel, evaluate a few factors: The number of members of the server, whether the server has Bot Guards, whether the group interacts or not, and whether the channel is paid or not…
In general, the analysis of social media channels is only suitable for projects that have been in operation for 6 months or more. With newly launched projects, this analysis is usually only for reference. It is difficult to do. Give us the correct information.
Fundamental analysis
In DYOR, fundamental analysis is a very important step; it helps us accurately assess a project’s intrinsic value. Through this step, you will see the overall picture of the project you are interested in, whether it is a new project or a project that has been operating for a long time.
Things to keep in mind in this analysis:
White Paper
In cryptocurrencies, the White Paper is an overview of the project’s characteristics and information, helping investors have an overview of the project. The project development team writes white Papers, so it will accurately interpret the project’s information; we can find almost all official project information, such as:
- Project definition
- Reason for being born
- Project Tokens
- Investors and partners of the project
- The mechanism of operation of the project
- Project development roadmap
- Team
- …
White Paper helps investors have a lot of useful information and helps them not spend a lot of time searching for project data. White Paper shows the core of the project and its potential in reality.
Some projects have very quality White papers, but they do not achieve much effect when starting to operate. And some projects don’t have a White Paper; this is a sign that they may be a “drawing cake” or a junk project.
Development team
The development team will show the scale of the project. Find out how many people on the team watch more or less. If a project has only 2 to 3 people, there will be a high personnel risk if one member quits.
In addition to the quantity, the quality of the development team is also very important. You need to consider the identity of the members to see how much experience they have in Blockchain, cryptocurrency, computer science, finance, or related industries. You can also rate each member’s past products and achievements to review the quality of their past projects.
You can find more information about them on LinkedIn and their own Twitter.
Project roadmap and vision
You can follow the project’s roadmap on the project’s Website, White Paper, Twitter,… to assess whether the project is developing on the right track or not. Failure to follow deadlines and lack of a roadmap can be warning signs of concern.
The vision represents the purpose of the project in the future. Looking at the project’s vision, you will know what problems the project will solve in the future, its competitors, and the technology they use.
Tokenomics
Tokenomics is an important piece of information that you need to learn and analyze thoroughly. It covers the factors that directly affect the token’s value and is a repository of information that determines the project’s long-term viability.
Tokenomics is tied to a project’s development roadmap, business model, and funding schedule. Tokenomics is associated with the project prospect, so distinguishing good or bad Tokenomics is very important to investors.
Here are some key pieces of information to consider:
- Total Supply: Total Supply of each project will be different, depending on the operation model and the array of activities of that project. In theory, a project with a limited supply will help the token’s value increase in the future, as this creates a scarcity of tokens, resulting in insufficient supply and demand. Conversely, if the supply is not capped, the future token price may not increase much and cause inflation. Cryptocurrency supply is strongly correlated with market capitalization.
- Token Allocation: Tokens will be distributed to the Dev team, Advisors, and backers… and the % allocated to the project’s ecosystem or the community Airdrop campaign will normally be divided among many people, and each person receives a portion. Remember the number of tokens distributed to each pool to predict if the tokens may be mass-discharged after the crowdfunding.
- Deflation plan: After a period of token issuance, the problem of inflation is hard to avoid. Therefore, the project needs to design mechanisms to reduce the inflation of tokens by periodically burning and locking tokens permanently… Many projects will burn a certain percentage of the transaction fee forever, making the total supply increasingly scarce and pushing the token price up. In general, the project has a Burn coin mechanism which is very beneficial for the project, but this is not core to evaluating quality Tokenomics.
- Token Use Case: This is an important part of the project. You need to analyze this problem with questions like: What is the token used for? What do users buy this token for? Do they have any utility in the ecosystem? What is the benefit of holding this token in the long term? Is the token tied to the project’s operating model?
- Trading volume and liquidity: The low or high volume of token trading on the market will most clearly reflect the project participants’ level. Besides, you need to ensure the token you want to invest in has good liquidity to facilitate buying and selling.
- Market Cap: This is the parameter showing the market capitalization of the project with the number of coins/tokens in circulation at that time. This is an important factor in assessing what “level” a project is at.
Third-party audit report
A crypto audit is important for assessing the accuracy, quality, and reliability of financial information and processes related to crypto projects. Auditing requires a lot of skills and expertise.
Many auditing firms play an important role in ensuring that projects are safe, secure, and legally enforceable. The audit helps to evaluate projects and make many recommendations to improve the project.
Realizing the importance of auditing, many projects have sought out leading auditing companies to ensure transparency and reliability. Passing the audit rounds of leading auditing companies will help the project increase its quality and reputation.
Some of the leading auditing firms are Certik, Hacken, Quantstamp, Trail of Bits,… When a third party audits a project, it is checked for lines of code and found for vulnerabilities and potential security.
Nonetheless, you should note that being audited does not mean that the project is completely safe, as there are cases where malicious code is added after the report is released.
Big and reputable Investor / Backer
Currently, many large investment funds and famous investment companies will always seek and pour capital into projects they consider to be potential and can bring breakthroughs to the industry, leading the trend.
Large funds and companies often research projects very carefully before investing. If they see potential projects, they will pour into the project a large source of money to support the project to go far. This helps the project pump higher. Therefore, this is another factor for evaluating the future of the project you want to invest in.
On-chain analytics
On-chain is important data on the Blockchain network that includes the information of all transactions that have occurred on a Blockchain network. On-chain data helps you to know a lot of accurate, quality data about users’ transactions in the market.
The on-chain analysis is so diverse and vast that it is difficult to cover them all in this section. Here is the important information you need to keep in mind when DYOR:
- Total Value Locked (TVL): This metric represents the number of project assets staking in a DeFi protocol. A project with a higher TVL can prove that this is a project being used by many investors and has the potential for future development. You can find this information at the Token Terminal or on the project website.
- Several active wallet addresses: A higher number of active wallets indicates that more investors are trading or holding, from which future price potential can be estimated. When the number of active wallets decreases, it shows that fewer and fewer people are participating in the market, causing the price to tend to go down.
- Wallet of Dev team, investors: Most of this information is public to the community. This information lets you check if the project has ever released tokens to the market. In addition, for mining coins like BTC, you should also pay attention to Miner’s wallets because their trading behavior also affects the market.
- The amount of Tokens pushed to the exchanges: When tokens are pushed to the exchanges, there may be a price adjustment or sell-off, and the token is withdrawn from the exchange a lot, it will be a positive signal.
- Track the wallets of the “sharks”: Keep an eye on wallets that hold large amounts of assets based on on-chain data. You can make investment decisions by monitoring their wallets to see which coins they sell or add.
Besides, you can use specialized tools to provide data, such as:
- Coinmarketcap and Coingecko to find more information, such as which exchange the token is listed on, 24-hour trading volume, etc. They also expand their services to other categories, such as newsletters, blogs, and glossaries. And in-depth data on each cryptocurrency and different market sectors.
- Github to look up project updates on the project and Dev team activity levels.
- DeFiPulse and DeFilliama to access information on projects related to NFT, DeFi. These two tools provide TVL metrics of decentralized protocols in the market to identify potential projects and see where the cash flows are.
- CoinMarketCal is a website that aggregates information about upcoming coin events to help investors stay updated with coins on the market.
- Google Trends is Google’s research and analysis tool. Based on this tool, you can track the popularity of the Coin you are interested in to see how people are searching for this Coin.
- Dextools – a suite of technical analysis tools and information tracking on DeFi projects. This is a useful tool for those trading investments, making money arbitrage on IDO projects that are continuously listed on DEX platforms today.
- LunarCrush is an in-depth data tracking site on crypto social media activities. It evaluates data on crypto exchanges, the market, and how KOLs affect cryptocurrencies.
- DappRadar is a place to track the actual number of users who are transacting or using decentralized applications (dApps) built on different Blockchains.
Technical analysis
Technical analysis is a method of analyzing historical price data through graphs to forecast future price trends. Technical analysis is usually based on two factors: Price reflects all market information, and market price movements tend to repeat over time.
Technical analysis will help you predict short and long-term price movements of tokens and determine when to buy and sell through candlestick patterns, price charts, indicators, etc.
Withal, you need to master the knowledge of chart analysis. In fact, technical analysis is always very difficult to do, even for experienced people. So, you can follow the analysts to cover this vulnerability.
Read news
Besides providing analysis, regular news updates are indispensable, as this is a nascent market, so token prices are often influenced by daily news. Constantly updating the news can help you change your investment strategy accordingly.
Currently, many sources of information related to projects on many social networking sites attract much attention from the community. However, there is also a lot of low-quality information that is still being circulated. Therefore, when you refer to news on social networking sites, you often carefully analyze the channel’s information source, established by whom, whether the information is objective and honest, etc.
Hire a financial advisor
If you are inexperienced in the market, then you should consider hiring professional financial advisors to get the right judgment, saving you time and effort. Howbeit, this is also risky because you are risking having a third party do the due diligence for you and you.
Summary
DYOR is a job that needs you to spend a lot of time. However, this gives you a lot of things like:
- Expand your perspective, your vision
- Brings a higher chance of successful investment
- Gain more knowledge in the field of cryptocurrencies, thereby giving you more opportunities to make money and keep up with the trends.
- Avoid scams from scammers.
Besides, after implementing DYOR, the conclusion that the project has potential or not is not based on all factors, including fundamental analysis, on-chain analysis, analysis of communication channels, etc. You should not ignore the rest for one good factor before making an investment decision.
A cryptocurrency market is a place with a large rate of return but also a lot of high risks. So, before you invest, equip yourself with professional DYOR experience and skills to be able to make the most informed decisions.
Hope this article has provided you with a certain understanding of the importance of DYOR. The last thing you need to remember is that the responsibility for investment decisions lies with you. So make sure you weigh all the information carefully before making any final decision.
