How to Do Your Own Research (DYOR)

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DYOR is one of the most commonly used phrases in the crypto sector. It is an acronym for DO YOUR OWN RESEARCH. It is used to encourage newbies and crypto investors to research and understand a cryptocurrency before investing in it so that they know what they are buying and how to support the project.

It is also used by crypto traders as a form of disclaimer so no one can hold them accountable if cryptocurrencies they call out do not perform as predicted.

Why DO Your Own Research?

You may wonder why it is important to do your own research.

The first reason should be confidence and pride. Trust me when I say it is always fulfilling when you do research on a coin and invest based on your own findings rather than all the hearsay of someone else.

It also protects you against shilling and Sybil attacks. Sybil attacks happen on social media platforms where someone creates multiple fake accounts on multiple social media platforms attempting to trick investors into purchasing a cryptocurrency. All fake accounts will be used to promote that particular cryptocurrency.

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It is also the same thing as shilling. Different social media accounts and/or influencers can be paid to advertise a particular cryptocurrency with the hope of positively affecting the price to attract investors.

In both cases, the outcome may not be favorable. It is not always easy to fake these fake accounts; this is why you must be skeptical in the crypto market and do your research.

However, while making research, always remember that no one can fully predict the crypto market. Research is great but you also need luck. Always remember that no one on earth can tell you if a particular business or crypto project will succeed. So when making investment decisions, invest with your net income as all forms of investment are risky.

Now, let’s see how you can DYOR

How to Do Your Own Research

It is quite easy to research crypto assets. I will take my time to talk about how you can make research from gathering information on on-chain metrics, smart contracts, and market data, to researching on the team, and how to invest in your preferred crypto asset.

The first step is to gather information and filter out the important ones. You can use CoinMarketCap or Coingecko to get out the important data you need from a particular crypto asset. Other things to look out for are the roadmap of the project, the whitepaper or business development plan, and also social media presence.

I’ll be taking you through my journey on how I make research on what crypto assets to invest in. The first step is to identify the crypto asset. There are so many ways this can be done. Sometimes I spend minutes going through Binance, CoinMarketCap, and Coingecko looking for the biggest losers or biggest gainers in the market. Other times I could come across a particular cryptocurrency on social media and based on the hype around the cryptocurrency, I can decide to make research to see if it is a worthy investment or not. It doesn’t matter what path you chose. It’s all up to you.

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After getting a cryptocurrency of my choice, I choose to go through its whitepaper and roadmap first. Other people may choose to go through its market data first. The choice is all yours. However, as a content writer, I love to go through the white paper for two reasons.

The first reason is to look out for plagiarized content. That is the first red flag of a bad project. Most people are out there looking for whom to use crypto pumps and dump on. This is a situation where developers of a cryptocurrency use multiple accounts to buy the crypto asset to pump the price and drive the fear of missing out (FOMO) syndrome into the crypto market.

When people buy the top, which is a signal for them to sell all crypto holdings from all the wallets they used, thus driving the price down. This situation puts those who bought the top at a huge loss.

Usually, most of these projects do not take out time to write a convincing white paper. Some of these projects copy the whitepaper from other projects and just change the name of the project to theirs. So by going through the white paper I can easily tell if they are trying to solve a real problem or if they just copied content from other whitepapers.

I also look out for red flags such as unusual promises of high ROI and vague definitions of how the crypto project will solve issues in the crypto market. This is why I like to go through the white paper first to see the crypto’s mission and its roadmap. If the project and its roadmap are all ok to me, then I can proceed to check out the market data and on-chain metrics.

When reading the whitepaper, look out for the following;

● What is the problem that the project is attempting to solve?

● What is the development team like? What is their track record? How are they organized and funded?

● Who is their competition and how big is the market they’re aiming for? What’s the roadmap?

● How does the token/coin derive value for the holder? Is it transactional or does it have a staking mechanism?

● What are the flaws or issues with this cryptocurrency?

On-Chain Metrics

On-chain metrics refer to the activity of a blockchain network. We often use on-chain metrics to monitor the behavior of users and their transactions, miners, and nodes. As with any piece of data, on-chain metrics are useful because their historical data makes it possible to identify trends and invest or trade accordingly.

The important metrics to look out for are transaction value, active addresses, and the activity of the top 10% wallet holders. These data can help you to know if a single wallet address is holding a majority of the crypto assets. This is a total red flag as it is easy to do a crypto pump and dump scheme.

It also allows you to know if people are actively buying that particular crypto asset or if it is just one wallet sending cryptos to other wallets and vice versa. To check the transaction activity, you can use blockchain.com for Bitcoin, Etherscan for Ethereum, Solana Explorer for Solana, and BSCScan for Binance Smart Chain.

Here are guides on how to use Etherscan, Solana Explorer, and BSCScan.

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Market Data

Market data is one of the most entertaining aspects of fundamental analysis. It is easy to track how big a project is based on its price trading volume circulation supplying total supply and market capitalization.

In my previous post, I discussed how market capitalization and circulating supply are vital to determining the price of a cryptocurrency. I also talked about why the price of a crypto asset does not necessarily mean it is a better project based on the market capitalization and circulating supply.

You can trackback to my post a few days ago to see how market data can help you determine if a project is worth investing in or not. The market capitalization can help you determine if a cryptocurrency is a large-cap, mid-cap, or low-cap project. Based on volatility, large-cap assets are less volatile than mid-cap and low-cap cryptocurrencies. A good way to know where you put your money.

The trading volume can also allow you to know how much interest the crypto market is showing on that particular crypto asset. Finally, you can use the maximum and circulating supply to know if the project will become higher in value within the next few months or years.

For example, Bitcoin has a maximum supply of 21 million coins but currently a circulating supply of 18.96 million coins. This means that it is closer to hitting its maximum supply. Once this happens, no more Bitcoin can be mined or created. Based on basic economics, low supply leads to high demand and high demand with low supply leads to an increase in price.

So it is convincing to say that getting bitcoin now is more profitable as the more scarce Bitcoin becomes, the higher your Bitcoin holdings becomes. This is how I use market data to determine which crypto assets I can invest in.

CoinMarketCap and Coingecko should be your soul mates when you’re doing market data research.

Let’s talk about Team Research.

Team

Another key element to look into is the team. Find out who is behind the cryptocurrency project and get to know them. With the use of platforms like LinkedIn and Twitter, it will be easy to research a team’s background unless it is anonymous.

However, if this is not the case and the team is anonymous, you are putting yourself in some form of danger. Is it safe to assume that all anonymous teams are a scam? No. However, anonymity removes any accountability. There’s no one to hold accountable if it’s a pump and dump scheme.

Craft.co, in addition to LinkedIn, is a wonderful place to get information about numerous crypto teams. Popular projects, their personnel, their history, and other significant information are included on the site.

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Is the team or the founder dependable? This is a question you should always ask. Checking someone’s portfolio and previous experience is the greatest approach to determine if they are trustworthy. If a new cryptocurrency’s creator has previously worked on another project and been successful, that success will most likely be duplicated in the newer team. This is one reason why people are interested in projects Andre Cronje is involved in.

Cronje is a blockchain developer that has previously worked on a variety of projects including Kosmos, Fusion, BitDiem, CryptoCurve, CryptoBriefing, and many others. Cronje also had his projects in which he dedicated a large amount of his time.

When Cronje finally revealed in 2020 that he joined the Defi market and planned to launch a yield farming aggregator, it was more than certain that his project, Yearn Finance, would succeed. Did it succeed? Definitely!

The founder of the team does not need a big portfolio like Cronje to succeed. However, the amount of experience they have in the crypto sector is a big plus.

You might encounter a team without any experience in the cryptocurrency market, but that is not a big deal. However, we must mention that there is more risk at play, as well as more unknown factors. But while investing in an underdog does require you to put incredible amounts of faith, it would not be the first time for such a combination to win in the end.

We’ve discussed the basics of DYOR.

Market data, on-chain metrics, the whitepaper, the project’s roadmap, and the team behind the project are a sure way to make research on what coin to buy.

After Doing Your Research, What Next?

Consider what your portfolio should look like. For starters, it’s important you keep a good portion of your portfolio in large-cap cryptos like Bitcoin or Ethereum. Remember, they’re less volatile than mid-cap and low-cap cryptos. Always remember to invest with your net income.

You should also think about investing in segments and how you want to allocate your portfolio across all segments. Segments may include core holdings like Bitcoin, privacy coins like Monero, metaverse, and gaming such as Mana and Blok.

Always remember to use the Dollar Cost Average method. Dollar-cost averaging is the process of buying a crypto asset in small quantities at repeated intervals no matter what the price is. For example, I can decide to buy $50 worth of Bitcoin every month no matter what the price of Bitcoin is.

This is it. I hope you understood me along this journey. You can make adequate research on any coin or project using these factors and metrics. I’m happy to be of help in any way.

If you need help, I’m just a DM away. Follow me to get more updates like this. You can also message me personally via WhatsApp with the link below if you want to know more about how to DYOR.