A term used to encourage fellow crypto investors not to blindly trust any claims, "do your own research" has been overused by shillers recently — how exactly can you DYOR? Find out below.
DYOR is an acronym that stands for “do your own research.” It’s commonly used by analysts, traders and market researchers who share their work and opinions on social media. Keep in mind that DYOR isn’t unique to crypto; commentators in other industries use it as well.
People use DYOR to encourage other investors not to blindly trust any piece of advice, research or claim, regardless of its origin. They hope that by encouraging everyone to research and understand the projects in which they invest, the crypto space will collectively become more informed. And as we all become more informed, scams and ponzi schemes wouldn’t be as fruitful as they once were — giving crypto a bad reputation.
Read: 5 of the Biggest Crypto Ponzi Schemes
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Where Did DYOR Come From?
DYOR came to prominence after hundreds of ICO projects crashed and burned between 2016-2018. Many of those projects were scams that left first-time crypto investors penniless and disillusioned. In order to draw these investors back and entice new investors into crypto, the community started using DYOR as a mantra to promote independent research and responsible investing.
Is DYOR Important in Crypto?
DYOR is indeed extremely important in crypto, especially for investors who aren’t yet familiar with decentralized technologies, like blockchain.
New investors aren’t usually familiar with all of crypto’s technical terms and lingo, and are therefore more easily duped by scammers who use jargon to make their non-existent projects sound exciting and, well, like they actually exist. For instance, in 2016, Dr. Ruja Ignatova promoted OneCoin as the next big cryptocurrency and a "better Bitcoin," but the blockchain behind OneCoin never even existed.
Read: The OneCoin Scam: the Dazzling Story of the Biggest Crypto Ponzi in History
Even though DYOR should be used to promote responsibility and accountability, today’s crypto shills use it as a disclaimer whenever they promote a new crypto project, which could be watering down the acronym’s meaning.
But crypto promoters are supposed to say DYOR a lot, aren’t they?
Yes, they are. And on the face of it, promoters and shills encouraging their followers to do their own research is a step in the right direction (or it should be at least). Unfortunately, the ways in which some of these promoters use DYOR is less than legitimate.
If you follow crypto influencers on social media, you’ll have seen a few posts that say something like “I’ve bought this coin/ token and you should too. Here’s ten reasons why you’re an idiot if you don’t.”
There’s then a lengthy explanation saturated with unnecessarily technical language, which is finally followed by a tiny disclaimer and the ever-present DYOR.
The problem here is that these posts don’t encourage you to think for yourself (and DYOR), but rather blindly follow along with whatever the influencer suggests you should do. The cursory DYOR signoff below their promotion merely serves as a disclaimer that alleviates any responsibility from the shiller.
While one may get lucky once or twice, trying to find profitable projects to invest in by listening solely to influencers (and thereby doing none of your own research) is remarkably difficult, if not impossible.
If you want to see for yourself, find a Twitter post from a brand-new crypto company and check the comments – you’ll always find five or ten promotional accounts there asking to “collab.”
Some of these promoters describe their profession as “shiller,” which is odd as it literally means “someone who helps another person to persuade people to buy something, especially by pretending to be a satisfied customer.”
Why would anyone purposely advertise (or quietly admit for that matter) that they convince people to invest in crypto projects by pretending that they invest as well?
If you wanted to look up exactly how much money the popular crypto shills charge for a post, crypto sleuth @zachxbt has helpfully put together a database showing just that.
If you glance halfway down the list, you’ll notice that Mean Girls protagonist Lindsay Lohan charges $25,000 for a promotional tweet, and $35,000 for two tweets and a retweet. Who knew she was so into crypto? I mean, does she even go here?
Does This Mean DYOR Doesn’t Matter Anymore?
If anything, DYOR matters more than ever!
Why? Because the shills are now watering down its meaning, and in some cases using it to more aggressively market projects. Sometimes there are so many shills screaming support for some project that when its token inevitably loses 99% of its value weeks after launching, nobody can quite believe what’s happened.
How Should you DYOR?
Doing your own research is vital if you want to get involved in crypto, but where should you start? And what questions should you ask?
To help you get started, we’ve put together a list that you can work through to better understand any project, coin, or token you’re thinking about investing in. Just to be clear, this list is by no means comprehensive, but it’s a useful safety net that should (hopefully) save you from investing in any dubious projects.
How did you hear about the coin/ token/ project?
Don’t trust everything you read online. When it comes to scouting for new crypto investments, make sure the information you use for any investment decisions comes from a reputable source.
Just to be absolutely clear, the untrustworthy end of the spectrum comprises Twitter posts from small-time shills or bots claiming some new project is “the next Dogecoin” or will do a 100X in the near future and “you can’t miss out!”
On the other end of the spectrum, following legitimate Twitter accounts of crypto personalities with a verifiable track record (not just a high follower count), or finding coverage of projects and recent developments in the industry on sites like CoinMarketCap, Cointelegraph or CoinDesk is a better way to source information.
Of course, where you heard about a given project doesn’t necessarily dictate whether it’s legitimate or not, but it's a great place to start.
What does the project do?
If you haven’t done much research into crypto already, prepare to be blown away by the number of projects that do absolutely nothing besides claiming to “provide value to investors.” This loosely translates to “make money for the developers and early investors at the cost of the people who invest later on,” also known as a ponzi scheme.
No matter how much you research, there will still be times you won’t be able to fully understand what a project does. There are two possible reasons for this: it’s either a legitimate project that is highly technical; or it’s a scam that masks its lack of purpose by belligerently stuffing technical language.
Regardless, you should probably stick to this golden rule: never invest more than you can afford to lose.
What does the project promise its investors?
The level of financial returns promised by any given crypto project is most likely inversely proportional to its chances of success.
In other words, if it’s too good to be true, it probably is.
Remember the insanely high APYs promised by numerous DeFi protocols during the most recent bull market?
Read: APR vs APY in Crypto: What’s the Difference?
In the recent bear crash and aftermath, a popular saying has sprung up: if you don’t know the source of the yield, you are the yield.
What does the project’s whitepaper say?
The key thing you’re looking for in a whitepaper is proof that the project solves a problem that really exists, and that another better-established platform isn’t going to solve that problem first.
The first step here is to read around “the problem” elsewhere to check that it really exists, and then you can look for better-known platforms that might have solutions lined up already. You should also look at the whitepaper’s layout, writing style and professionalism. People who launch legitimate projects check and vet their whitepapers, so there shouldn’t be any mistakes.
Read: How to Read and Analyze a White Paper?
Is the coin listed on CoinMarketCap?
CoinMarketCap lists most active cryptocurrencies (20,000 at the time of writing), so finding a project’s coin page is a great place to find some basic information, especially related to tokenomics. If the project’s been around for a while, you might find a relevant deep dive article in Academy — CoinMarketCap’s very own educational portal, which will supply you with all the information you need to start your research.
Who leads the project?
Projects whose founders, developers and team members have a strong track record are a major factor when vetting a project. While pseudonymous founders are not uncommon in the crypto space — alarms should go off if they hide behind too many facades, don’t reveal their professional credentials or were involved in past projects that were scams or rugpulls.
Likewise, beware any overly charismatic leaders, many of whom are secretly pied pipers who lead investors off into the financial wilderness, never to be seen again. Case in point: Do Kwon (who founded Terra), and 3AC’s founders Kyle Davies and Su Zhu.
Read: A Full Breakdown of the Terra Crash
Who finances the project?
The following might sound peculiar considering what we’ve said about DYOR so far, but bear with us.
In short, we’re looking for heavy hitting venture capitalists and angel investors. Now you might rightly ask “so if some famous VC invests then I should too? Doesn’t that fly in the face of DYOR?”
Yes, it does a bit. However, the large and established VCs all use in-house analysts who specialise in finding and vetting crypto projects. And make no mistake; the vetting process isn’t a walk in the park. As such, when a project receives backing from a big investor, that’s usually a good sign.
We should stress though that their investment doesn’t mean we should all pile in behind them (although they love it when we do that: they can sell their investment for a huge profit). Because even the smartest investors make poor decisions sometimes. What VC backing does mean, however, is that the project stood up to a reasonable standard of scrutiny, and we can safely assume that it’s probably not a scam. Again: probably.
Will this project last?
This is one of the more speculative questions on this list, but it’s nonetheless still important.
Warren Buffett, arguably the most successful investor alive, argues that if you don’t feel comfortable holding a stock for 10 years, you shouldn’t hold it for 10 minutes. Accordingly, if you aren’t willing to hold a crypto for a decent length of time, you probably haven’t done enough research to invest in it (unless of course you’re a day trader).
Is the website saturated with baffling buzzwords?
For better or worse, the crypto space is saturated with buzzwords. And while some are useful technical terms (DeFi, NFT, Rollups, etc), others are basically just gibberish (Web 4.0, Bitcoin 2.0, hyper deflationary, etc). Any project that has these meaningless buzzwords plastered all over its website is a red flag.
Knowing the difference is between legitimate technical terms and nonsensical buzzwords is an important part of DYOR. If you need any guidance, you can look up all the crypto buzzwords in CoinMarketCap Academy’s Glossary.
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