Independent Research: Why You Should Not Follow the Crowd Blindly in the Crypto Market

Who is using DYOR to protect their wallets?

The ultimate rule of cryptocurrency investing is simple: before you decide to invest, you must thoroughly understand what you’re buying. This is not optional; it’s a survival rule. Especially after experiencing billions of dollars in scams in 2023, this principle becomes even more critical.

The core meaning of DYOR is “Do Your Own Research,” reflecting the fundamental characteristic of the crypto world—personal responsibility. No one will cover your losses, and no one will warn you about upcoming pitfalls. Everything depends on how much homework you do.

Why do most people lose money in the crypto market?

The answer is often not because of the market itself, but because of poor decision-making.

The prices of crypto assets are influenced by multiple factors: technological progress, regulatory changes, market sentiment. This variability is not a problem in itself, but the issue is—scammers also see these opportunities. They promise you “double your money in a day,” “guaranteed returns,” “insider information,” all of which are bait.

The real danger comes from FOMO (Fear Of Missing Out). When you see a coin skyrocketing or hear everyone around you discussing it, anxiety begins to erode rationality. At this point, the brain abandons analysis, and investors turn into gamblers. Scammers exploit this by creating urgency: “Buy now, or it’s too late.” The result? Your money goes in, and the project team runs away.

In 2023, such tragedies happened in the DeFi space. Fintoch experienced a rug pull in May, stealing $31.6 million. How did they do it? They promoted support from Morgan Stanley (fake), promised daily 1% returns (impossible), and the CEO was an actor. Victims didn’t do their homework.

How to judge if a project is worth investing in?

Before taking action, ask yourself these four questions:

1. Do I really believe this project can solve a real problem?

Project teams often make big promises, but whether you can actually get the benefits is another matter. Read their whitepaper. Not sure how to read it? Look at the whitepapers of Bitcoin, Ethereum, Solana to learn the format and understand what true technical planning looks like.

2. Does this project have a competitive edge in the market?

There might already be ten similar projects out there. You need to identify what makes this project different. If not, or if the differentiation is weak, be cautious.

3. Is the project team reliable?

The background of founders and core team members is crucial. What have they done in this industry? Any successful cases? Can you find them on LinkedIn? Or are they completely anonymous? Anonymity is usually a bad sign.

4. Are there regulatory issues?

Rules vary across regions. It might be legal in the US, EU, UK, but banned elsewhere. You must be clear about the policies in your location.

What tools can help with this research?

• CryptoPanic and CoinGecko: real-time news and sentiment analysis
• Chainalysis: on-chain data, see actual usage
• Price charts: identify macro factors influencing price fluctuations

Look at active user numbers, daily trading volume, community engagement. A coin heavily advertised but with only a few thousand dollars in daily trading volume should be suspicious.

What mistakes did people make in 2023 that led to being scammed?

Jimbo Protocol on Arbitrum chain stole $7.5 million. These projects follow the same pattern: promises of high returns + aggressive marketing.

Deus Finance on BNB Chain was hacked for over $6 million due to smart contract vulnerabilities. This reminds us—code risk must also be considered.

Just in May 2023, scams like these caused losses of $54 million. These are not isolated cases but systemic issues.

Institutional players have changed the game

In 2023, a large influx of institutional funds (hedge funds, big financial institutions) has transformed the ecosystem. Liquidity increased, but the requirements are higher.

What does this mean? Retail investors can no longer rely on luck and information asymmetry to make money. You must do homework like institutions—study market liquidity, volatility, long-term stability. This is no longer optional; it’s a necessity.

DYOR is not a luxury option

If you don’t do research, the risk is trusting the wrong sources and losing your entire position. If you do research, the worst-case scenario is investing in a mediocre but legitimate project—it may not skyrocket, but at least your principal is safe.

A healthy portfolio comes from multiple carefully selected projects. Diversification is not greed; it’s wisdom.

People who do research and those who don’t have vastly different survival rates in this market.

Common Questions

Does DYOR really guarantee no losses?
No. But it can significantly reduce the chances of being scammed and help you avoid obvious traps.

Is DYOR also necessary in the stock market?
Absolutely. The principle applies universally, but cryptocurrency is even more unforgiving.

What are HODL and FOMO?
HODL means holding firmly without selling; FOMO is rushing in due to fear of missing out. The former requires conviction, the latter is emotional. Both require rational restraint.