Responsible investing requires an understanding of the risk you’re taking. What are reputable crypto focused news sites saying about the project, and has it been in the headlines recently. What is the status of those projects, and what happened to investors’ money? If they have a solid following, they have a lot more to lose for spreading bad info so they usually spread legit ones.
- Check the regulation situation for cryptocurrency in your country or region.
- A good way to also gauge adoption is how incentivized developers and builders are to come to the project and build there.
- It’s wise to understand the asset’s features and how it fits into the current market ecosystem, as well as whether you think the project has advantages over its competitors.
- It’s important to understand the legal considerations of investing in a particular cryptocurrency, including any potential regulatory risks.
- As such, when a project receives backing from a big investor, that’s usually a good sign.
- Even the most reliable websites may not always have the most recent information due to the decentralized nature of the crypto world.
Tokenomics can also feature compelling details such as founder and team vesting. The main reason for doing research is to practice responsible trading and disciplined thinking to minimize risk. It would be akin to gambling if one were to invest a lot of money in a product without knowing anything about it. Let’s look at some of the main reasons that investors are advised to DYOR. But what exactly does “doing your own research” entail, and how are people doing their due diligence?
What is the meaning of DYOR?
If an asset has been in a prolonged bear market, many traders holding losing bags will likely want to exit the market when their position reaches break-even. To learn more about calculating the risk profile of a project with tokenomics, see our article on token validation. Here, we break down four baseline factors to consider when looking to buy a coin, token, NFT, or any other stakes in a crypto project. Many of the links in this article lead to Binance Academy, a hub of free crypto and blockchain education. Binance Academy has a glossary of crypto keywords and a library of topics for anyone looking to improve their crypto literacy. Besides touching on NFTs, the metaverse, and other fundamental crypto topics, there’s also a selection of intermediate and advanced articles.
Thus, ensure that a site covers wide topics and has in-depth, detailed reports and has been serving people for some time. As far as crypto investments are concerned, the following steps can come in handy when you DYOR. During this time many investors entering the market were scammed. So as a way to warn others from getting scammed, people started to use the term.
Following the Crowd
Not only that, it also allows you to receive updates straight from the developers. Check the overall market sentiment towards the cryptocurrency by looking at forums, social media, and other sources of information. Take a look at the price history and chart patterns to understand market trends and what macro factors have impacted the price.
In the world of crypto investing, it can be tempting to follow the crowd and invest in whatever coin is currently trending. Instead, do your own research and make investment decisions based on your own analysis, not on what everyone else is doing. The whitepaper is a crucial document that provides detailed information about a cryptocurrency. Ignoring the whitepaper can lead to a lack of understanding about the coin’s purpose, technology, and potential. Always take the time to read and understand the whitepaper of any cryptocurrency you’re considering investing in. While doing your own research is essential when investing in cryptocurrencies, there are several common mistakes that investors often make during this process.
Tools and Resources for DYOR in Crypto
Now that we’ve established why DYOR is important, let’s look at some methods traders and investors use to conduct proper research. In addition, some tactics used by bad actors in the crypto space are designed to prey on inexperienced investors — or those who haven’t conducted disciplined research. These investors also took note of Kaspa’s fair launch, with no pre-mining or any other pre-allocation of coins, which aligns with the ethos of coins like Bitcoin, Litecoin, or Monero. This indicated a commitment to decentralization and fairness, which further increased their confidence in the project.
The website should share useful information about the key people behind the project. Poor designed websites, spelling errors and a lack of transparency around the team are all red flags of an outright pump & dump scheme. Never stick to one information source, no matter how drawn you are to the channel.
Related Articles
The most reliable cryptocurrency sources will list both benefits and drawbacks of any project. Disregard promotional articles on news sites, as they are always exaggerated headlines intended for the sole purpose of generating clicks, hype and FOMO (fear of missing out). When you’re done reading, always consult other SM channels to try and get the full picture.
Investors can look into various essential areas when researching a project. The team members and their track record and background, the project roadmap, previous successes and failures, and community engagement are all valuable initial areas to explore. It’s good practice to cross-reference relevant details from several reputable sources. Thorough research helps assess the validity and potential of a project before investing, so let’s take a closer look into some key criteria on which you can assess crypto projects.
Why and How to Do Your Own Research (DYOR) When Investing in Crypto
Many scam projects can be hard to spot at first, and it’s not uncommon to see new or inexperienced traders lose significant assets because they were drawn in by marketing tactics. Do your own research, or DYOR, as popularized by crypto enthusiasts, is a common phrase used in crypto investing and trading. The idea behind this term is to reduce the number of uninformed investors by encouraging users not to follow the word of others blindly. Any new projects or areas of interest should be subject to a significant amount of research before being considered for investment.
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