The internet is full of crypto cliches. The most familiar of these is: “Do not consider this as financial advice; kindly do your own research before proceeding.” Even though this statement, right before a video or anywhere within a blog, takes care of the legal implications for the content creator, it does little to actually protect the viewers.
And that is exactly what we plan on changing through the course of this discussion.
- DYOR involves a stronghold on technical, fundamental, and sentimental analysis
- It is important to know the blockchain in detail before you can consider investing in its native token
- A good start is to look at the tokenomics, the problem it solves, and the team behind the project
- Despite being an underrated resource, the project whitepaper should be an important part of your DYOR strategy
We do empathize with content creators trying to fend for themselves. But throwing ‘DYOR’ (Do Your Own Research) around without a care in this world is misbegotten, to say the least. Viewers are told to do their own research, but they are left to wonder::
- How does it actually work?
- What stuff do we need to proceed with it?
- Is it just for crypto or is it, asset independent?
- And, is it hard to execute?
Unfortunately, not many creators actually take up these questions and address them. Because we understand this and the many issues a new crypto investor, trader, or even a HODLer faces, we plan on explaining DYOR in its entirety in the next few sections, especially by answering all these underrated, relevant, and indispensable questions, once and for all.
Buckle up, as today we shall be driving right into the world of DYOR.
So what is DYOR, exactly?
The answer is simple: Do Your Own Research. But what does this mean in the larger crypto context?
Let us begin with an analogy.
Ever tried to lose or gain weight in order to achieve that perfect physique? What strategies did you follow to accomplish the same? Did you just eat right? Or did you simply follow a dedicated workout regimen? Or, did you simply focus on getting the right amount of REM sleep in? It goes without saying that you must have followed every trick in the book. This is exactly how you need to approach crypto investment as well.
No, we aren’t asking you to lift weights before investing or trading in crypto. Instead, we urge you to keep a note of every aspect relevant to knowing your tokens better. That is exactly what DYOR is.
As an investor, trader, or HODLer (regardless of the asset class you are in), DYOR involves looking closely at three aspects. These include:
And while these metrics hold across asset classes, we shall keep the discussion restricted to crypto.
How do these metrics work?
Well, they work together. Yes, it is as simple as that. But the tricky part for most new and even mid-level crypto investors is to understand each of these terms in its entirety.
So let’s take up each aspect and analyze it from a DYOR-centric perspective.
Difficulty Level: High
Relevance: Moderate to High
Technical research is all about looking at the price action of an asset, which may or may not help you extrapolate the future moves. And most importantly, price actions are best viewed as trends, giving birth to charts and patterns.
To get a good hold on technical analysis, you need to invest a lot of time learning about the indicators, patterns, sequences, and more. Well, here is a detailed resource on technical analysis, simplified just for you. Enjoy reading.
Difficulty Level: Moderate
Relevance: Very High
Crypto fundamental analysis is all about knowing the project better. For instance, if you want to get some ETH (short for the cryptocurrency Ether) for yourself, you might want to know a bit about the Ethereum blockchain, the upcoming developments, new inclusions, and so on.
You can always read about crypto fundamental analysis in-depth, but more importantly, it involves implementing strategies to know the project better and gauging the token’s growth potential, depending on the former.
Difficulty Level: High
Identifying sentiments isn’t as easy as learning the fundamentals and even getting the hang of the technical aspects of crypto. Sentimental analysis is more about delving into the multi-variable crypto environment, just to look at the global sentiment, social chatter, and other intangible aspects like fear and greed.
And you can get yourself up to speed by digging right into this informative piece about market fear and greed that more or less explains crypto sentiments pretty well.
How to Put the Analysis to Work?
Handy insights are swell, but it’s all the more difficult to apply them for results. Therefore, to make the metrics and the analysis work, you must follow the pointers mentioned below.
Start With the Negatives
While optimism is one of the best virtues, you shouldn’t feel confident about the investments before entering them. The best way to proceed is to start nitpicking using technical tools and indicators to find crash or correction possibilities.
If you are a “fundamental” person, start critiquing the project on multiple fronts. And if your plans to find the wrong things about it fall flat, congratulations, you might have found yourself a winner.
Disclaimer: None of this is financial advice. Discretion advised
Understand the Project, In and Out
A good DYOR approach requires you to understand how the project will fare in the long run and how many people might actually be interested in investing. You need to know that tokens or coins aren’t actual assets. Instead, they are securities – as no profitability is associated with the projects.
Unlike Apple Inc, a company that can be in profits if it sells an insane number of gadgets, a massive volume of ETH sold across exchanges doesn’t make the Ethereum Blockchain profitable.
Therefore, the future valuation of your token directly or indirectly depends on the number of people willing to buy. Also, a better part of this research concerns the project’s tokenomics, including its inflationary or deflationary nature, coin release schematics, and the credibility of the team behind the project.
No, we aren’t talking about Musking here.
Fact Check: Musking is a hypothetical crypto term used in light humor. It talks about the over-hyped effects of Elon Musk’s tweets on specific crypto assets. And while this isn’t an actual term yet, there is nothing improbable in the crypto space.
If you take social media seriously, it is better to watch informative videos and resource-rich blogs from experienced content creators to know about a project, its popularity, and even tokenomics.
It is important to try and identify sketchy crypto influencers who actively participate in “Pump-and-Dump” schemes to attract unwitting investors. And if you aren’t sure about how to identify the shady ones, it is best to avoid social media influence altogether.
Is It the First?
And here comes the biggest DYOR element of all. If you are unsure about the technical, sentimental, and even fundamental aspects of a project, try to check if it is the first of its kind. And if it is the first of its kind, it most certainly is solving a major real-world problem.
For instance, Bitcoin is still insanely popular as it is regarded as the first hedge against inflation or store of value. Similarly, even Ethereum is the first when it comes to introducing faster payments, smart contracts, dApps, and more to the blockchain ecosystem. As far as problem-solving is concerned, Chainlink is the first ecosystem to connect real-life information or oracles to on-chain resources, making it a hot and famed project right now.
Please remember that these aforementioned insights are more like speculative examples and cannot/shouldn’t be the basis of financial decision-making. Put plainly, this ain’t investment advice.
The bottom line is this: Never invest in a token or coin if you aren’t sure what problem it is solving or will solve. Also, in most cases, reading the project whitepaper might help.
It isn’t easy to find the right crypto asset to invest in, trade, or even HODL. And while most resources in the market offer half-cooked information and carefully preface it with the “DYOR”, as a legal obligation, there is a lot more to “doing your own research” than what meets the eye.
While we did talk about the nitty-gritty of DYOR as part of this discussion, it is a lot more difficult than we may have let on. We did try to simplify it for you in theory, but in reality, you require a more technical toolkit to implement it in its entirety – including whale holdings, locked liquidity, and more. And that is something we shall cover in a separate article on another occasion.
For now, you can start your preliminary research by following the ideas mentioned here, i.e., reading the whitepaper, understanding technical and fundamental analysis better, and implementing them with restraint.
Regardless, it isn’t always possible to match the volatility of the crypto space with insights. Therefore, it is always advisable to only invest the amount you are ok losing, even with DYOR by your side.
And if any of these ideas sound good enough, download the CoinSwitch app right away to get started.
Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.
Table of content
Subscribe to Our Newsletter with exclusive content.