How To DYOR Crypto: How To Analyse Crypto Projects For Investment?
Are you a beginner in the crypto industry? Are you worried about what to buy and what not to invest in? Are you concerned about the potential threats to your crypto investment?
Well, all this has one answer: Do Your Own Research.
Now this research cannot be random. You have to be very strategic about how you go about it, what your requirements are, what things can be disregarded, and all that.
Research in itself is an art. And research in the crypto market is a different ball game altogether. In this article, we have tried to explain the ways you can use your own research to analyze and invest appropriately in the crypto market!
What is the Importance Of DYOR?
In this era of the Internet and access to worldwide knowledge about everything under the sun, why do we need to do anything by ourselves?
Well, the answer to this is the easy availability of knowledge can make you compromise on quality. There is so much to know that one can easily get confused as to what to retain and what is okay to be forgotten about!
A similar thing occurs when you are doing crypto research. There are numerous videos and articles, but to successfully conduct research you need to understand the basic ins and outs of it. And you need strategic avenues to navigate through these tricky paths.
How to Effectively DYOR in Crypto?
Know Your Crypto
The very first thing you need to ensure before buying a particular cryptocurrency is that does your crypto have a good sale rate? Does it have nice traction? What do I mean by that?
Let’s look at some facts!
Simply put, before anything first you should go to popular Cryptocurrency websites like Coinmarketcap or Coingecko or any reputable site and look at what the current price of the cryptos is. See what its’ trading volume is.
Not only the price, but the trading volume on the exchange should also be high enough.
Your coin should be listed in a reputable exchange and you must ensure that the listing is genuine.
(Note: The price action in the recent past should not be reason enough to scare you away from the crypto.)
Search for the one you were planning and choosing and compare it with others. Note down its trends for the last few weeks and then compare it with some other cryptos.
Analyze the trend and then only come to an informed decision about choosing a cryptocurrency.
After getting an idea of the recent past, go back to the initial periods when this token was actually made public for crypto users. The three usual ways of doing this are by early investors, a closed set of miners, and some early handful of private investors.
And each of these initial launch methods affects the overall economics of the token.
For example, let’s look at Airdrops and compare some of them. The Uniswap token was airdropped to certain users and we saw its receivers being owners of 10,000$ worth of Uniswap Tokens.
But unlike that, another token airdropped, the Good Aringding, people who did not sell it initially now presently have almost no utility and hence no value.
Another way to go about knowing your crypto is by Sentimental analysis. This is looking and hearing what most people are feeling about the project and the stocks. This process is obviously not completely full proof, because many people may include some total non-experts well. And honestly, feeling or predicting something would only take some way. Though it is a good place to begin at if you choose to follow stuff said and predicted by experts!
And the third way is Fundamental Analysis. This is basically an Analysis on the fundamental level. This involves you studying the actual ideas associated with the project, looking up the people behind it: the team, and also keeping an eye out for the progress of a specific project.
Tips For Understanding Ideas and The Team
The best way to get a grasp over the actual ideas behind a particular project is to hear it out from the team itself. Now sometimes this is very easily available in the form of YouTube videos where time again we see a member of the team coming up and clarifying some aspect or saying they are in an interview about the new project. So in these kinds of videos, you get first-hand verbal clarification from the team, and this makes your Understanding more holistic.
For instance, with the sweeping popularity of the NFT Worlds project, a couple of interviews with ArkDev had come out. So for a person who is more or less familiar with the crypto field, for them understanding the team videos would not be that difficult.
Also sometimes, if you follow the project progression on their official social media account, then also you might have better access to first-hand knowledge about the project.
Initial Research is the basic way to wrap your head around what cryptocurrency you should buy if you are not sure about what to go for!
This is one of the best ways to begin the initial research on your coin. Though many videos are well-researched with great analogies that help you understand better. But the problem is, some are totally under-researched and might not fare well at all!
Therefore you should go for reputable sites like Binance Research, ICODrops, or Messari. A nice way to keep knowledge from these sites is to take notes from these videos and write down any doubts you might have.
Now there are some crypto tools like Messari, to analyze cryptocurrencies.
Go to a reputable site like that and look at the profile of that coin you are interested in. The profile should be able to provide you with the history and origins of the crypto, give you a detailed analysis of the market and also talk something about the progression of the project.
To be able to conduct secondary research, note down the names of the key players involved in the project, like the Founder and CEO.
Some sites are also reputed to offer a core technical analysis of the coin. They can also provide you with knowledge about how the coins intend to work!
Logic: Why Should These Sites Be Trusted?
The above-mentioned sites are known as big players on the platform and thus they are under the pressure to do everything accurately. Or else, they might end up being subjected to severe retaliation from fans as well as the project. So even if you do go for these sites, go for a site that can be trusted. A site that has no option but to get everything right.
However, there has been instances in the past where bad projects were listed and they got rugged in the end. So do not entirely depend on ICODrops.
(Note: While going to these sites you must remember that they provide you initial knowledge of new Tokens. So they might not provide you with stuff in the present news now. For that you need to follow actual news.)
Going to youtube we should understand what to look for. As we discussed earlier, we should listen to the team or key players and what they have to say about them.
Youtube usually has all their interviews. Your job is to arrange their interviews in chronological order and listen to them at say, 2× speed. So that you have an idea of the key ideas without getting too much into technical jargon.
By Youtube videos, I meant educational Youtube videos and not the shilling videos.
Take Diligent Notes
As we have established before that while watching videos or anything, take notes. Make your own notes about the topics. This ensures proper understanding on your part.
Note-taking also helps make it easier for you to compare data cited by multiple sites. This way your research will be more informed and refined.
It will also be useful in double-checking the validity of important data. And since this process of research is a stringent process over some days. Note keeping from scratch will help you go back to old notes, it allows you to fill in information gaps from new articles and videos.
Check Out The Whitepaper
If you can search out the whitepaper of crypto, even that can provide you with additional information.
Otherwise, you can also look up a blockchain explorer of that cryptocurrency.
What is that now?
Okay, so tokenomics is a fancy word in vogue used to describe the economy of (crypto) Tokens or coins. So you need to understand if the coin is inflationary or deflationary.
So what are inflationary assets? It means that these coins will be mounted unlimited. Thus if the coin is not popular enough, then with time the price of the coin will keep falling. While for deflationary tokens the minting or release of new tokens is stopped. This might make the price of that token soar very high since there is no new releases anymore!
A token can be both inflationary and deflationary. For instance, Bitcoin is presently inflationary because some Bitcoins are still left to be mined. But once this mining is done, there is no more Bitcoin to be mined, then eventually it will become deflationary.
News and Updates
Okay, now that you seem to have dealt with the technicalities of your research, let’s look at how to make your research hold more current value.
We will have to do some value addition. How to do that? It is by following the news articles and recent updates on that particular crypto project.
For that you need to first look up the roadmap of the project; you need to know about the plans for the project: its launch dates, token distribution methods, etc. With regard to these, you must also look at the latest updates that are being planned, the phases of such updates, and the dates.
You should also look up the blogs on the cryptocurrency websites and just check out if the project is working along the lines it said it would in the roadmap. This gives a good idea if the project is reliable or not. Even if you can skim through the headlines on a particular cryptocurrency you might come to know about all the new updates or partnerships that could affect tokenomics.
Tip: To know more exclusively about cryptocurrency news you can avail yourself of cryptocurrency news sites like Coin Telegraph, Decrypt, Coindesk, etc.
Precautions: Things to Keep in Mind While DYOR
- If you see that the token you are interested in is not active on reputable exchanges or if its trading volume is low, tread with caution.
- There is something called the farm token and you need to steer clear of them. These are tokens developed, given an arbitrary value, and sold to early investors. To encourage users to invest in it, more of these special tokens are made thus making them inflationary! And then that is money is returned to the early investors. These are one of the crypto scams you need to be aware of while DYOR.
- Another thing you need to keep in mind while doing your research is that the token that interests you should not be all in the pocket of private investors and original developers. This might lead to them selling them when the price is high which may prevent the tokens from reaching their potential high. It should be within a community accessible to the public.
- While looking up road maps, you might come across projects without a road map available. And even when the interviews with key players of that project fail to provide any goal-oriented roadmap, it is likely that the project lifespan would probably be shorter. You should tread with caution in such scenarios.
- Try not to rely on one site or one video or single anything. When your hard-earned money is online it is always important to double-check your double checks wherever possible!
How to Do Your Own Research in Crypto: Video
So, to summarize this article we would like to concisely list out the steps for your own research in cryptocurrency. So always begin with checking out the present life of your crypto on a reputable exchange, watch videos and read up on the project, watch recent interviews of the team behind the project, look up the crypto analyzing tool sites, keep notes of whatever you come to know, look up roadmaps and finally follow recent news and updates.
Alongwith this, we suggest, you also remember the few precautions mentioned.
Yes, the process is long-drawn. But if you want to invest in a project that can make money for you, allowing this much time and energy behind DYOR is an absolute necessity!