A Must-Read for Crypto Trading Beginners: What is DYOR? Master the Investment Wisdom of "Doing Your Own Research"

Quick Overview: What is DYOR?

DYOR stands for “Do Your Own Research,” which means “doing your own homework” or “conducting your own investigation” in Chinese. This concept embodies the core spirit of the cryptocurrency space—personal responsibility. DYOR encourages every trader to conduct thorough independent research before buying, selling, or holding any crypto assets, ensuring that their decisions align with their trading strategies and risk tolerance.

Why Does the Crypto Market Especially Need DYOR?

Compared to traditional financial products (stocks, bonds, bank deposits), the cryptocurrency market is more volatile, with more complex factors influencing prices—including technological upgrades, regulatory changes, and market sentiment swings.

More importantly, this market attracts a large number of scammers. They exploit FOMO (Fear Of Missing Out) psychology to create urgency, claiming “fleeting opportunities” and “overnight riches.” Cybercriminals fabricate false endorsements and promise unreasonable high returns (such as 1% daily profit), luring inexperienced newcomers to blindly follow the trend. Once scammers reach their goal, they quickly run off with the funds, leaving victims with total losses.

In contrast to traditional investments—where fund managers conduct in-depth due diligence on companies before locking in funds—crypto traders must adopt the same rigorous attitude.

What Risks Can DYOR Help You Avoid?

By embracing the DYOR spirit, you can:

Identify warning signs — Spot projects lacking transparency, with low liquidity or insecure protocols, which could directly threaten your funds.

Improve trading skills — Study market participants and project dynamics to gradually upgrade from blindly following to rational analysis.

Boost confidence in your portfolio — Allocate funds across multiple trusted crypto projects, diversify risks, and spread potential losses across different assets.

Respond to market changes — In 2023, institutional capital flooded into the crypto market, bringing stricter guidelines and stability requirements. Individual traders must understand how institutional participation affects liquidity and volatility, which requires higher-level market research skills.

DYOR Checklist: Five Steps to Make Investment Decisions

Step 1: Understand the project’s whitepaper

You don’t need a finance degree, but you must read the whitepaper to understand its vision and core issues. It’s recommended to start with the whitepapers of established projects like Bitcoin, Ethereum, Solana to set a benchmark for what a high-quality paper should look like.

Core questions:

• Do I believe this project aims to solve a real problem?
• Is its solution feasible in practice?

Step 2: Analyze market competitiveness

Research the asset’s features and how it fits into the current market ecosystem. Determine whether it has a substantial advantage over competitors and assess if existing technology might become outdated soon.

Focus points: Does the project possess core technological innovation or market advantages?

Step 3: Perceive market sentiment and trends

Check the overall attitude towards the project through forums, social media, and other information sources. Review price history and chart patterns to identify market trends and influencing factors. Tools like CryptoPanic, CoinGecko can aggregate news and sentiment analysis.

Tip: Be wary of hype and “pump” phenomena (aggressive marketing attempts to excite you without focusing on actual delivery).

Step 4: Deep dive into founders and team

Verify the backgrounds, work experience, and track records of team members. Check if they have experience in crypto or blockchain and their reputation within the industry. LinkedIn can be used to verify their professional credentials.

Important reminder: Scammers sometimes hire paid actors to impersonate high-profile executives.

Step 5: Check real-world application and regulatory compliance

Assess whether the asset is used for actual transactions and its market adoption potential. Look at active user numbers, daily trading volume, and community engagement. Use blockchain analysis tools to track real-world usage.

Also, review your local regulations regarding the crypto in question. Understand if pending policies might restrict trading or liquidity; some tokens may be restricted or banned in certain regions.

What Happens if You Don’t Do DYOR?

Skipping research and jumping in directly increases risks dramatically:

• Information bias — You might trust incorrect sources
• Total loss — Blindly entering scam projects can lead to losing all your funds
• Difficulty in spotting scams — Many scams are cleverly designed; even experienced investors can fall prey

2023 DeFi Pump-and-Dump Cases

In 2023, the DeFi sector experienced a wave of “pump-and-dump” scams. These scams typically involve project teams promoting their projects to attract participants and then fleeing with the funds.

Fintoch case (May 2023):
This DeFi platform stole $31.6 million from users. Tactics included false endorsements from Morgan Stanley and promises of 1% daily returns. It was later revealed that the CEO was just a paid actor.

Jimbo Protocol (Arbitrum chain):
Caused losses of $7.5 million. The project lost a total of $54 million in May 2023, ranking among the top ten security incidents that month.

Deus Finance (BNB chain):
Resulted in $6 million losses, a common type of DeFi scam, part of the 2023 “pump-and-dump” trend in crypto.

DYOR Vocabulary Extensions: Other Important Terms

FOMO (Fear Of Missing Out) — The psychological state where traders rush to open positions, fearing they will miss out on great opportunities. This is a favorite tactic exploited by scammers.

HODL — Advises traders to hold assets long-term and not sell easily.

Whitepaper — A detailed document explaining the project’s technical and economic model, serving as a core basis for assessing the project’s legitimacy.

Summary: DYOR Is Your Safety Helmet in Crypto

If you’re new to crypto trading, DYOR might be the most important concept when entering this volatile market. Nothing replaces careful due diligence and rational risk management.

Remember: Not everyone promoting a project is a scammer, but even legitimate projects can fail to deliver if their fundamentals are weak. Scammers have no intention of delivering—they only want to profit from your emotions and FOMO.

Next time you see “fleeting opportunities” or “incredible returns,” stop. Pull out your DYOR checklist, do your homework, and then decide whether to enter. Your wallet will thank you.