DYOR Meaning In Cryptocurrency Industry
One of the most crucial aspects of being a cryptocurrency investor is considered to be conducting your own research, commonly known as DYOR.
The term gained popularity during the period between 2016 and 2018, when numerous ICO projects flooded the cryptocurrency market, leading to a lot of investors being deceived or losing money due to various scams masquerading as crowdfunding schemes promising quick riches.
To combat these fraudulent activities, investors were advised to conduct thorough research and investigation before investing in any project. This phrase has now become a part of everyday language and is frequently used to encourage novice investors in any field to navigate the misinformation and potential pitfalls.
Additionally, some cryptocurrency personalities use it as a disclaimer when discussing projects or analysis on social media platforms.
What Happens If You Don’t DYOR in Crypto?
As an investor, failing to conduct your own research can put you at risk of trusting an unverified source, which can ultimately result in the loss of all your invested capital. Several fraudulent projects are challenging to detect initially, and it’s not uncommon to see inexperienced or new traders lose a significant amount of assets due to deceptive marketing tactics.
One form of aggressive marketing that is prevalent in the crypto world is known as shilling. Shilling involves an individual or group of people aggressively promoting a crypto project to create hype and attract investments. They manipulate the token’s market value, leading to a temporary rise in value before the project’s issues become apparent and the token’s value plummets. These projects often pay celebrities or influencers to endorse them and lend credibility to the short-lived scam.
How To Do Your Own Research (DYOR)?
Generally CoinMarketCap or CoinGecko are used for researching in cryptocurrency industry.
CoinMarketCap, being the leading platform for cryptocurrency prices, rankings, market intelligence, and research, equips users with the necessary tools to conduct their due diligence. The platform provides transparent information on coin rankings, token rankings, market capitalization, trading volumes, and other crucial details that aid in comparing different currencies. The full methodology used to list and rank crypto tokens can be found on their website.
Once the basic foundation is established, users can click on individual coins to access more detailed information such as circulating supply and total supply figures, a list of exchanges where the asset is traded, and the fully diluted valuation (FDV), among others. Other research tools on CoinMarketCap include price charts for technical analysis, website and social links of individual projects, audits, GitHub activity, social follower counts, and a list of wallets supporting the asset.
Users can also explore the historical data tab, which provides valuable information on recent price momentum for coins and tokens, as well as a historical overview of their prices in the past few years. The platform offers other tools, including an educational platform called Alexandria, a listing of exchanges, NFTs, and a beta feature called Gravity that provides constantly updating project news, articles, and user sentiment.
You can use CoinMarketCap for your own researches.
How Do I Research About Cryptocurrency Projects?
When researching cryptocurrency projects, I pay attention to a few factors. These factors may vary according to the current market situation. But in general these factors are:
- Industry Analysis: Before investing in a cryptocurrency project, it’s important to know which industry or sector the project aims to disrupt. This will give you an idea of the potential value that the cryptocurrency could generate if the project’s solution is superior to existing options.
- Team Size and Expertise: In the world of crypto, many projects are developed by teams with a shared background, such as a common employer, startup, or educational institution. Therefore, it’s crucial to investigate the professional and educational history of the project’s founders to assess their expertise and track record.
- Whitepaper Review: A whitepaper is a document that explains the problem that a crypto project aims to solve and how blockchain technology is essential to the project’s success. It’s important to read the whitepaper carefully and ask questions if anything is unclear. If the whitepaper leaves you with more questions than answers, it’s a red flag. You can also reach out to the project’s team members or community for further information.
- Funding Sources: It’s worth investigating whether a crypto project has received venture capital or private equity funding, as well as which investors have backed the project. If reputable and experienced investors have invested in the project, that’s a positive sign, but keep in mind that even the best investors can make mistakes. Additionally, some projects may have received non-equity grants from government-backed entities or tech multinationals, which is also worth looking into.
- Partnership Assessment: Examining the quality of a project’s partners, whether they are in the crypto space or external to it, can give you a sense of the project’s potential. External partners are generally more highly valued by crypto investors. However, be cautious of partnerships with world-leading corporations, and examine the details of the partnership agreement.
- Blockchain Technology Use: It’s important to understand why a crypto project has chosen to use blockchain technology, as this should be fundamental to the project’s existence. The whitepaper should provide a clear explanation, and the project may also have blog posts or other materials that expand on this topic.
- Token Type: Cryptocurrencies can have different functions, such as work tokens, utility tokens, or cryptocurrencies. It’s essential to know the function of the cryptocurrency you’re considering investing in, as this will impact how it captures value.
- Leveraging Crypto Research: There’s a wealth of publicly available research on cryptocurrencies, so it’s worth exploring whether the project you’re interested in has been covered by independent analysts. A quick online search can yield valuable information.
- Track Record: If a crypto project has been around for a while, it’s worth reviewing its roadmap and past blog posts to see how well the team has stuck to its deadlines and communicated delays. The team’s track record is crucial to the value of the underlying cryptocurrency.
- Upcoming Dates: It can be useful to know what’s coming up for a crypto project, such as mainnet releases or major version upgrades, as this can affect the cryptocurrency’s price volatility.
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