DYOR (Do Your Own Research): A Guide for the Impatient
“Not Financial Advice” and “DYOR” are standard messages you’ve heard on every web 3 podcast, newscast, broadcast, and written anything. Let’s be honest here: you’re ultimately in charge of your financial future (this is true even if you employ a personal financial advisor, I’d add).
So how do you DYOR properly? Well, I’m happy to announce we’re working on the next iteration of FlourishingAI, which will extend its auto trading and provide user DYOR which are truly easy to use and help drive confident action rather than analysis paralysis. Until then, here’s my handy guide for DYOR on any digital asset you’re considering purchasing. If you’re new to crypto and want to get smart about researching web 3, this guide’s for you.
- The Basics
Start your journey with big and established currencies such as Bitcoin, Ethereum, and BNB. While volatile, high trading volumes make these the safest investments in the space. Net, read Mastering Bitcoin by Andreas Antonopoulos to understand the basics. Skip the programming parts unless you’re into that. By the time you’re done, you’ll understand wallets, addresses, private and public keys, and how blockchains work.
2. Understand the Problem and Ascertain if the Project Solution is Viable.
Read the Website and Whitepaper. Focus on two things: whether the project looks credible and the problems the project is trying to solve. Ask yourself if the problem is worth solving. Then determine if it makes sense to introduce blockchain technology to solve the specified problems. Finally, figure out if the team’s offering is substantially better than available alternatives (be they crypto based or not). Run a SWOT analysis. Anything not solving a problem is speculative (oh, hello SHIB). Check the project’s socials — what you’re looking for is not too frequent updates (indicating they’re only working on marketing) or too few (indicating slow advancement).
3. Understand the Tokenomics
Is it a token? A coin? Know the difference. Does the project build on an existing chain or does it have its own blockchain? how are tokens issued and have a few early holders amassed a large concentration of the token already? Such concentration could be problematic if so, since the token will move a lot if a few people make moves. Also , determine the consensus algorithm of the chain a crypto project uses — and the extent of centralization or decentralization. The former isn’t necessarily bad (look at unstoppable domains), but there should be a good reason to centralize. Otherwise decentralization should be preferred. Finally, understand what exchanges they’re listed on, as a listing on an exchange (centralized or decentralized) which is too small increases risk substantially.
4. Understand the Team
Is the team anonymous? An anon team doesn’t necessarily make a project a scam or rug pull, but a public team does point to confidence and transparency. Does the team have a background which makes the team suitable to handle the problem (in step 1)? Do a bit of digging on platforms such as LinkedIn and Twitter to verify persons behind the project. Then reach out to the team and ask them your questions. Any team who truly believes in their mission will talk incessantly about it (our team and our community can’t shut up about making crypto accessible for new holders, for instance).
5. Join a Holder Community!
Going it alone virtually guarantees failure. Try joining a community such as FlourishingAI’s community where there is data driven, respectful discussion of tokens and coins. Look for maturity of participants and the maturity of the discussion. Avoid overly hyper discussions or groups where discussion is overly loaded with memes or with repetitive posts, which is usually a good indicator of bots which are employed to provide the illusion of community. Also look for a project’s partners — a strong project will attract other strong projects which are happy to partner to create synergy. Trite but true, you are the sum of your five closest friends. The same is kind of true for projects.
Ok, the above five research goals in place, I’ll end with a few final thoughts:
· Not all the information will be of the same quality or trustworthiness. While you should consider all available info, place more credibility on a press release, media coverage, or partner announcement than a random tweet or reddit thread. When in doubt, consider motivations of the writer.
· Consider the relevance and importance of the data. Again not all news is created equal. Coindesk and Decrypt are more relevant than press releases or project tweets. Another example: news of a data breach or safety issue regarding your investment is massively more important than a new planned feature.
· DYOR takes time. Don’t rush it.
These are JUST the basics. I could write dozens of pages, but I’ll keep it to the above five reference points, which alone put you ahead of the pack.
And stay tuned, because while DYOR takes time, FlourishingAI will automate and speed up much of this soon.
May you always Flourish!
