What is DYOR in Crypto?
DYOR is closely related to fundamental analysis in crypto. It refers to a research-based approach to buying cryptocurrency or investing in DeFi projects. The concept of DYOR aims to reduce misinformation and the investment pitfalls that come from relying solely on other people’s opinions or assurances.
The term “DYOR” can also act as a disclaimer when crypto traders or experts share their thoughts, recommendation, or research on social media platforms. By adding the phrase, the writer expects you to verify the information on the post, and not to take it as direct investment advice. This is a way of mitigating potential liabilities on their part, such as if a coin they discuss turns out to be a scam.
What Happens If You Don’t DYOR in Crypto?
If you don’t do your own research as an investor, you risk trusting an unverified source and losing all of your capital. 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.
This type of aggressive marketing is known as shilling. Shilling is when a person or group of people aggressively promotes a crypto project to generate excitement and bring in investments. They drive the token’s market value up before the issues with the project come to light and the project’s value plummets. These projects often pay celebrities or influencers to back the project and lend an air of credibility to the short-lived scam.
Another way scammers can trick investors is a Sybil attack on social media platforms like Twitter and Reddit. In this case, the scammer opens multiple fake accounts and talks up the scam project with these accounts to make it a trending topic.
How To DYOR in Crypto
There are several steps you can take to research and evaluate a crypto coin or project before investing:
- Use websites like the Ledger Coin Price page to get more information about the coin, including links to the website and social media. Review details like the market cap and the total coins in circulation to understand the overall token prospects.
- Evaluate the project’s website. Be on the lookout for red flags like:
o Little to no information about the project
o No contact information
o A shabby-looking website
o No information about the team behind the project
- Review the project development activity on the smart contract. Is there a history of updates to the codes? Is the smart contract audited yet? A genuine project should have regular updates and smart contract audits.
- Check out the social media presence and marketing tactics. Are they trying to explain and promote their project organically? If you discover that they are into flashy practices like shilling, you want to be extra careful.
- Visit the project’s community groups on Telegram or WhatsApp. How active are the community members? A relatively quiet and small community can be a red flag.
- Use Ledger Academy resources to understand project types and ways to spot red flags.