Why should you DYOR? A must-read self-research guide for crypto traders

In the cryptocurrency market, the easiest time to suffer losses is when you listen to others without thinking. DYOR (Do Your Own Research) is not just a slogan; it’s a survival rule that directly relates to the safety of your assets. This term emerged during the 2016-2018 ICO boom, when countless scams caused many investors to lose everything. Years later, the importance of DYOR has not diminished—in fact, it has become even more urgent.

What is DYOR—A Self-Protection Rule in Cryptocurrency

DYOR stands for “Do Your Own Research.” The concept embodies the core individualism in the crypto world—no one can vet projects for you, and no one is responsible for your losses.

Imagine traditional investment firms conducting thorough due diligence on each company before locking in funds. The same logic applies to crypto trading. Before you spend real money on any project, you must ask yourself several key questions:

Does this project truly solve a real problem? Do I believe in this solution? Is this project competitive among similar products? What is the background and reputation of the founders? Is this project compliant with regulations in major jurisdictions (U.S., EU, UK)?

Each question can determine your final profit or loss. The core of DYOR is to establish a comprehensive research process before making trading decisions, ensuring your choices align with your values, goals, and risk tolerance.

Consequences of Not Doing DYOR—Real Scam Cases as Warnings

If you skip DYOR, what awaits you? The risk level skyrockets. Cybercriminals are experts at exploiting human nature—they use FOMO (fear of missing out) to create urgency and false scarcity. When hype overwhelms you, it’s hard to stay rational and consider the risks.

The most common scam in crypto is the so-called “Rug Pull.” Project teams hype their offerings early on to attract investors, then disappear with the funds once they reach their target. In 2023 alone, there have been numerous shocking cases:

Fintoch incident shows how outrageous scams can be. This DeFi platform claimed to be backed by Morgan Stanley (completely false) and promised daily returns of 1%. The result? They stole $31.6 million from investors. Later, it was revealed that Fintoch’s CEO was just a paid actor. This is the cost of neglecting DYOR.

Similar cases include Jimbo Protocol on Arbitrum, which scammed $7.5 million, and Deus Finance on BNB Chain, which caused $6 million in losses. These aren’t isolated incidents—they reflect a wave of pump-and-dump scams that swept the industry in 2023.

Why do these scams succeed? Because most victims never did proper DYOR. They see the promises, believe the stories, and rush in. They forget basic due diligence, ignore risk assessments, and are driven purely by emotion. Scammers exploit exactly this weakness.

DYOR Checklist: Five Essential Items to Protect Your Assets

Doing DYOR may sound complicated, but it can be broken down into five specific steps. You don’t need a finance degree—just some basic knowledge and patience.

Step 1: Understand the project’s market differentiation. Clarify what makes this asset unique, how it fits into the current market ecosystem, and what advantages it has over competitors. Also consider whether existing technology might make the project’s infrastructure obsolete in the future.

Step 2: Gauge market sentiment. Don’t be swayed by a single voice. Check forums, social media, and various information sources to understand the overall attitude. Tools like CryptoPanic and CoinGecko can help aggregate news and sentiment data. Look at price trends and chart patterns to identify macro factors behind market movements.

Step 3: Research the founders and team thoroughly. Know their backgrounds, experience, and track record. How many years of experience do they have in crypto or blockchain? What’s their reputation in the industry? Check their LinkedIn profiles. This info helps assess whether the team is trustworthy.

Step 4: Confirm real-world adoption. Consider whether the project has practical use cases and broader adoption potential. Look at active user numbers, daily trading volume, and community engagement. Use blockchain analysis tools like Chainalysis to track how many real users are involved.

Step 5: Study the regulatory environment. This step is often overlooked but can be the most critical. Check your country or region’s stance on cryptocurrencies. Are there pending regulations that could restrict trading or liquidity? Some cryptocurrencies may be banned in certain areas. Understanding these legal risks is essential.

Why Institutions Make DYOR Even More Necessary

After 2023, the crypto market has undergone significant changes. From hedge funds to mainstream financial institutions, large capital has flooded into the space. This should be a good thing—more capital means greater market stability. But on the flip side, market dynamics have become more complex.

Institutional involvement affects liquidity, volatility, and even the long-term trajectory of the ecosystem. This means individual traders must upgrade their DYOR skills. You need to understand not only the fundamentals of projects but also how institutional actions influence markets, how regulations are evolving, and the technical strengths of different chains and protocols.

This complexity demands more thorough market scrutiny. DYOR is no longer optional; in the era of institutions, it’s a necessity.

The Additional Value of DYOR: Diversification and Risk Management

By diligently performing DYOR, you’ll identify multiple trustworthy projects instead of betting everything on a single “great opportunity.” Building a diversified portfolio across well-researched projects naturally reduces risk. Diversification helps mitigate the impact of any single failure.

More importantly, the DYOR process makes you a smarter trader. The market knowledge, risk awareness, and judgment skills you develop become your weapons for long-term survival in this space.

Summary

If you’re new to crypto, DYOR might be the most important word to remember. Nothing replaces careful due diligence and prudent risk management. In this market full of temptations and traps, DYOR is your strongest self-defense tool. Promises of overnight riches are often just traps waiting for you to fall into. But as long as you stick to DYOR, you can spot warning signs—lack of transparency, low liquidity, weak security protocols.

Remember: your assets are your responsibility. Doing your own research is the best form of investment insurance.