DYOR (Do Your Own Research) - the importance of analysis for investing in crypto

DYOR (Do Your Own Research) - the importance of analysis for investing in crypto

DYOR is an acronym that means do your own research. This is one of the basic principles of work in the cryptocurrency sector, especially taking into account the conditions of decentralization of all processes and the anonymity of each participant in the system.

Main tasks of DYOR

Investing in cryptocurrency, as a highly volatile asset, is considered an a priori task with increased risks of financial drawdown. To eliminate the loss of capital, the DYOR method is used, in which the system user conducts his own analysis of the profitability of a particular project and its prospects. This is because of factors such as:

  • hype in the media space;
  • the formation of a bubble due to an artificial increase in the value of an asset, which does not correspond to its real value in a specific period of time;
  • the behavior of market whales, who, in one way or another, can influence the situation with the value of specific assets to achieve their own benefit.

If you need more than your own skills and knowledge, you can use information from well-known experts, traders, and cryptocurrency market enthusiasts who post their publications marked DYOR.

DYOR verification algorithm

Any trader or investor's main task is to exercise healthy skepticism, focus on actual data, and consider the possible correlation of the value of the selected asset before making a transaction. To rationally analyze all available input data, you can follow the following Do Your Own Research algorithm:

  • Team rating. If, at the dawn of the development of the cryptocurrency market, all communities were formed on conditions of absolute anonymity, today, this condition is increasingly leveled out. This happens because investors and traders invest much more actively in various projects; if the team members are known, it is possible to analyze the community's activities in the long term. This determines a kind of project reliability rating and its profitability from the point of view of the possibility of obtaining real income.
  • Partnership. Investing in projects that no market leaders support is a dubious proposition. On the contrary, if the project is highly rated by well-known companies, for example, Binance and Coinbase, there are many more reasons for competent investment since these companies usually employ a team of professional analysts who carefully evaluate all potential risks and benefits.
  • Activity on social networks. Today, the benchmark for the reliability of a project is precisely the transparency and active activity of the owners on social networks. The more publications with valuable information, reposts, and likes, the greater the chances of joining a truly worthwhile project.
  • Whitepaper and Roadmap. The expectation of profit should not be illusory and endless. Therefore, it is necessary to check, by DYOR, the clarity of the plan and the consistency of its implementation in practice by a particular company or a specific community. If the goals are formulated incomprehensibly, or their implementation does not meet the stated deadlines, it is worth considering the feasibility of contributing to such a project.
  • Tokenomics. When choosing digital coins or tokens for purchase and making a profit from their subsequent sale, you need to ensure that this digital asset's real capitalization corresponds to its value. That is, it is necessary to exclude intentional manipulations by community owners to obtain their own benefit.

Special attention should be paid to the referral system and other additional income sources on a specific project. Sky-high payout rates often indicate a scam rather than the honesty and transparency of the project. All this borders on increased risks of losing capital at any time.