Protect Your Portfolio: A Complete Guide to Self-Analyzing Crypto Projects

Why do traders lose money in crypto? The story begins with ignoring DYOR

DYOR is an abbreviation of “Do Your Own Research,” meaning to conduct your own investigation before any investment. It is not just advice but a necessity in the crypto industry, where over the past years, scams have totaled hundreds of millions of dollars.

In 2023, scammers became more active. The DeFi platform Fintoch performed a rug pull in early May, stealing $31.6 million from investors who promised fantastic returns of 1% per day and support from Morgan Stanley. The CEO turned out to be an actor for hire. The Jimbo protocol on Arbitrum lost $7.5 million. Overall, in May 2023, the top 10 projects that performed rug pulls resulted in a loss of $54 million. Additionally, the Deus Finance smart contract exploit on BNB wiped out over $6 million.

These cases demonstrate the real losses awaiting those who neglect DYOR.

The danger of FOMO: how scammers play on emotions

Cryptocurrency technologies are much more volatile than traditional financial instruments—bonds, stocks, bank deposits. The value of digital assets is influenced by technological progress, legislative changes, and market sentiment.

Scammers exploit the fear of missing out (FOMO), creating a sense of urgency: “this is now or never.” They resort to aggressive marketing, known as shilling, which evokes strong emotions. When excitement about promised returns takes over, rational thinking shuts down. It is precisely at this moment that beginners forget to assess risks and make balanced decisions.

Online criminals know: playing on investors’ emotions is the main lever. Before the victim realizes they’ve been scammed, the fraudulent trail often disappears.

Practical checklist for analyzing a crypto project

You don’t need a financial education to protect yourself. Here’s what to check:

Key questions before any purchase

• Do I believe in the solution offered by this project?
• Does it have competitive advantages in the current market?
• What is the reputation of the founders and team?
• Does the project comply with regulatory requirements in key regions (USA, EU, UK)?

Studying the white paper and technical documentation

Start with the project’s white paper. To understand what quality documentation looks like, study the white papers of Bitcoin, Ethereum, and Solana. The white paper should clearly describe the problem and the proposed solution.

Analyzing competitive advantage

Understand the features of the asset and its position in the current ecosystem. Does the project have real advantages over competitors? Will existing technologies make its technical foundation obsolete in the near future?

Checking the team through open sources

Research the biographies, experience, and track record of the team. Check for experience in crypto and blockchain, solid reputation in the industry. LinkedIn and other professional networks can help gather information.

Assessing real-world usage

Is this asset used for actual operations? Is there significant potential for mass adoption? Pay attention to the number of active users, daily transactions, and community engagement. Blockchain analysis tools like Chainalysis can track real adoption.

Monitoring market sentiment

Check the overall market attitude towards the cryptocurrency through forums, social media, and specialized sources. Tools like CryptoPanic and CoinGecko are ideal for news collection and sentiment analysis. Study price charts, identify trends and macro factors influencing the price.

Regulatory framework

Find out how cryptocurrency is regulated in your country. Check upcoming regulations that could restrict trading or liquidity. In some regions, specific crypto assets may be prohibited.

Why institutional players changed the game

In 2023, there was a sharp increase in institutional investors in the crypto market—from hedge funds to large financial organizations. This led to stricter rules, higher stability requirements, and increased market capitalization.

The consequence: individual traders are forced to adopt more advanced research methods. It is now important to understand how institutional players influence liquidity, volatility, and long-term stability of cryptocurrencies. Deeper study of market behavior, government regulation, and technological potential of projects is necessary.

The benefits of DYOR for your portfolio

When you conduct your own research, you:

• Learn to recognize warning signs: lack of transparency, low liquidity, weak security protocols
• Expand your knowledge of the market by studying legitimate and scam projects
• Become more confident in diversifying your portfolio
• Reduce risk by spreading investments across several verified crypto assets

The main thing is not to let marketing noise and FOMO control your decisions. Developing a habit of DYOR turns you from a novice into an experienced trader.

How to distinguish a legitimate project from a scam scheme

Even legitimate projects sometimes promise too much. But if a project is legal but weak, it simply won’t deliver results. Scammers, on the other hand, do not fulfill their obligations and use shilling to achieve their goals.

Rug pull remains one of the most common scam schemes in DeFi. Owners attract participants with aggressive marketing and then run away with the funds. This does not mean that all projects that advertise are scammers, but you need to learn to distinguish attractive opportunities from traps.

Conclusion: DYOR as an investment discipline

If you are new to crypto and trading, the principle of DYOR plays a critical role when entering this volatile world. When choosing your first positions, conduct thorough checks and manage risks wisely. Remember: the time spent on research is an investment in protecting your capital.

Frequently Asked Questions

What does DYOR mean in crypto?
DYOR stands for “Do Your Own Research” — conduct your own investigation. Traders should study projects using reliable sources before investing. This term gained popularity after the wave of ICO scams in 2016-2018.

Is DYOR some kind of token?
No, it is simply a principle and a reminder not to blindly trust everything in the crypto industry, especially projects that look too good to be true.

Is DYOR only applicable to crypto?
No. In traditional stock investing, DYOR means the same — before risking your money, conduct your own research.

What is HODL?
HODL (Hold On for Dear Life) means that traders should not rush to sell their assets despite market fluctuations. It is a long-term holding strategy.

What does FOMO mean in the context of crypto?
FOMO stands for “Fear of Missing Out” — the fear of missing an opportunity. It is a psychological factor that compels traders to open positions hastily, fearing to miss profitable trades.