If you don't understand DYOR, you're just a lamb waiting to be slaughtered in the crypto world.

Many people enter the cryptocurrency world like stepping into a casino—listening to others, following the trend to buy, and then regretting after losing money. Actually, this problem has long had a solution: DYOR (Do Your Own Research).

It’s not a new concept, but very few actually do it properly.

What is DYOR? Don’t Be Fooled

The essence of DYOR is simple: before investing your money in any crypto asset, you must do your own homework. This is not optional; it’s essential.

Imagine how traditional investment funds operate. Before throwing money in, they conduct extremely thorough due diligence. Every detail is reviewed—project logic, team background, market position, risk assessment.

Unfortunately, many crypto traders don’t do this at all. They see a coin trending on social media, jump in the next day. The result? Heavy losses.

Before you spend money on a coin, ask yourself these questions:

• Do I truly understand what problem this project aims to solve?
• What advantages does this project have over competitors?
• Are the founders and team reliable? Do they have experience in this field?
• Is this project compliant with major regulatory regions (US, EU, UK)?

If you can’t answer these, it means you haven’t truly done DYOR.

Lessons from 2023: Why DYOR Has Become More Important

The crypto market in 2023 has undergone a qualitative change. A large influx of institutional funds—ranging from hedge funds to top financial institutions—has poured in, one after another. Sounds good, but what does it mean for individual traders?

The rules of the game have changed.

Institutional players bring not only more capital but also stricter scrutiny, more complex trading strategies, and a deep impact on market liquidity. If you’re still using old methods to research projects, you’re already falling behind.

Crypto market volatility is much higher than traditional financial instruments (stocks, bonds, bank deposits). Prices are influenced by technological advances, regulatory changes, and market sentiment.

In such an environment, those who don’t understand DYOR are like entering a forest without a map—they have no idea where they are.

How Do Scammers Trick You? Learn to Recognize the Tricks

This is the most critical part. Crypto scammers are very cunning, exploiting two human weaknesses: greed and fear.

Common tricks:

Trick 1: Creating Urgency
“Buy now, it will rise 10x tomorrow!” “This opportunity lasts only 48 hours!” “Miss this wave, and you’re done!”

This is called FOMO (Fear of Missing Out). Scammers deliberately create an atmosphere of “if you don’t buy now, you’ll miss out,” making you impulsive. Beginners are most vulnerable because they’ve heard about market volatility and stories of people making big money with perfect timing. They don’t realize these stories are exceptions, not the norm.

Scammers operate under this psychological state. By the time you realize you’ve been duped, they’ve already taken the money and run.

Trick 2: Celebrity Endorsements and Fake Promotions
In May 2023, a show took place on DeFi platform Fintoch. The platform claimed to be supported by Morgan Stanley, promising 1% daily returns. Sounds like a gift from heaven? It’s a trap.

What’s most ironic? The CEO of this project was not a real CEO—just an actor. Fintoch executed a Rug Pull, stealing $31.6 million in one go.

Trick 3: Rug Pull
This is the most common scam in DeFi. The process usually goes like this:

1. The project heavily promotes and attracts funds.
2. Once the funds reach a certain size, the founders withdraw all the money from the contract.
3. The project collapses completely, and the community gets nothing.

In May 2023 alone, over $54 million was stolen via Rug Pulls. Among them:

• Jimbo Protocol (on Arbitrum) lost $7.5 million
• Deus Finance (on BNB Chain) was hacked for over $6 million due to smart contract vulnerabilities

These are not small numbers.

How to Do DYOR? Here’s a Framework

You don’t need a finance degree. You only need: patience, skepticism, and a method.

Step 1: Read the Whitepaper

Yes, that technical document many people are too lazy to read. But it’s the most direct way to understand a project.

Want to know what makes a good whitepaper? Read the whitepapers of Bitcoin, Ethereum, Solana. See how they explain technology and justify value. Then compare with the project you’re considering investing in.

Step 2: Clarify Market Positioning

What problem does this project aim to solve? Who are its competitors? What makes it different?

Don’t just listen to their self-promotion. Check community feedback, look at on-chain data, see if the asset is actually being used.

Tools like Chainalysis can help track real transaction data—see how many active users there are, how many transactions daily. Data doesn’t lie.

Step 3: Investigate the Team’s Background

Check the founders’ LinkedIn profiles. What have they done before? Do they have experience in crypto or blockchain? What positions did they hold at previous companies? Have they failed before?

Failure isn’t necessarily bad—many successful entrepreneurs have failed before. The key is what they learned and whether they are seasoned.

If the team is just a bunch of strangers assembled on the fly, be especially cautious.

Step 4: Monitor Market Sentiment

Visit forums, check social media, use tools like CryptoSync or CoinGecko to track news and opinions. See how people evaluate this project.

But remember: social media contains both genuine opinions and a lot of “shilling”—a marketing tactic that exaggerates project benefits to stir emotions.

Step 5: Understand Regulatory Risks

Crypto regulation varies worldwide. A coin might be popular in the US but restricted in the EU. Some regions even explicitly ban certain crypto assets.

Check your country or region’s stance on this asset. Are there upcoming regulations that could impact trading or liquidity? This homework is essential.

The Cost of Not Doing DYOR

Simply put: your money.

Every day, thousands of traders are scammed or lose money because they didn’t do their homework. The problem is, many scams look very professional—if scammers are skilled enough, even experienced people can fall for them.

But there’s a key difference: The difference between genuine scams and real projects lies in the details.

Real projects, while they do face market risks, are actually building something. Fake projects are just setting traps from the start. If you carefully read whitepapers, check team backgrounds, and track on-chain data, you can identify 99% of scams. That remaining 1%? That’s market risk—something every investment faces.

Final Words

DYOR doesn’t guarantee you’ll make money, but it can significantly reduce your chances of losing it.

In an era full of institutional funds and sophisticated scams, neglecting homework is like actively handing your money over. Spend some time researching, choose projects you understand, and manage your risks. That’s within your control.

The rest is up to the market.