DYOR: How to Conduct Your Own Research and Protect Yourself from Crypto Scams

Every newcomer in the cryptocurrency world has heard stories about someone becoming a millionaire overnight. But they’ve also heard stories about people losing everything due to a single bad investment. The difference between these two scenarios often comes down to one simple thing: did the person do their own research before investing? DYOR — short for “do your own research” — is the most important habit every trader should develop. It’s not just a recommendation; it’s a necessity in a world where crypto scams are becoming increasingly sophisticated.

Why is DYOR not just advice but a necessity?

The cryptocurrency market differs from traditional investing in one key aspect: everything happens quickly. The value of an asset can change within hours due to technological updates, new laws, or simply shifts in market sentiment. These factors create both opportunities for profit and risks of loss.

The problem is that scammers exploit these same opportunities. They wait for moments of market hype. They see the fear of missing out (FOMO) in beginners’ eyes and take advantage of it. They promise incredible returns, create false urgency, and push people into hasty decisions. Without proper research, people often fall victim to these manipulations.

In 2023, the number of institutional players in the crypto market surged sharply. This means large financial organizations and hedge funds are actively entering the space. On one hand, this stabilizes the market. On the other hand, individual traders need to learn more complex research methods to stay competitive.

How to get started: a practical DYOR checklist

Before investing in any crypto project, ask yourself a few critical questions:

Step 1: Understand the project’s core idea

Start with the basics. Read the project’s whitepaper — a technical document describing what the project aims to solve. You don’t need a financial background to grasp the main points. Ask yourself:

• Do I understand what problem this project addresses?
• Do I believe this solution is genuinely necessary?
• Can this solution be implemented more simply in another way?

If you can’t understand the core idea, that’s a red flag. Many scam projects intentionally make their descriptions confusing to ward off skeptics.

Step 2: Research the team and founders

The people behind the project are often the most important factor. Check:

• Do they have prior experience in the crypto space?
• Do they have a good reputation in the industry?
• Can you find their LinkedIn profiles or other proof of their competence?

Red flag: founders hiding behind pseudonyms with no industry history, or a team that talks more about themselves than about the product.

Step 3: Analyze actual usage of the asset

There’s a big difference between a project that people actually use and one that just raises investments. Investigate:

• How many active users does the project have?
• What’s the daily transaction volume?
• Is the community growing or stagnating?

Use specialized blockchain analysis tools like Chainalysis to track real usage. Don’t trust marketing figures blindly.

Step 4: Understand the project’s market position

How does this project differ from competitors? Does it have advantages that others can’t replicate? Or is it just a copy of an existing solution?

Also, consider whether new technologies might make this project obsolete soon. Review the project’s roadmap and development plans.

Step 5: Check regulatory status

Different regions have different rules regarding cryptocurrencies. Find out:

• Is this cryptocurrency banned in your country?
• Are there laws in development that could impact its trading?
• Is the project successfully regulated in the US, EU, or UK?

Regulatory issues can wipe out an asset’s value almost instantly.

Step 6: Gauge market sentiment

Check social media, forums, and specialized platforms like CryptoPanic or CoinGecko to see how the market perceives the project. But be cautious: FOMO is powerful, and sometimes the crowd is wrong.

Look at historical price charts. What were the key moments of growth and decline? Are there logical reasons behind these changes?

Why is it so important to know DYOR right now

Crypto history is full of examples showing what happens when people ignore the DYOR principle. Here are some vivid cases:

Fintoch (2023): A DeFi platform promised fantastic profits (1% per day!) and falsely claimed backing from Morgan Stanley. It turned out the CEO was just a paid actor. The project disappeared, taking $31.6 million from users with it.

Jimbo on Arbitrum (2023): This project executed a classic rug pull, stealing $7.5 million. The owners simply vanished with the funds after attracting enough investors.

Deus Finance on BNB: Over $6 million was lost due to smart contract exploits. This shows that even projects not intending to scam can be vulnerable to attacks.

In total, over $54 million was lost in 2023 through rug pulls and other crypto scams. And most of these victims didn’t even do basic research.

Common beginner mistakes that can be avoided

Mistake 1: Investing impulsively

When FOMO takes over, reason goes out the window. You see others making money and want to jump in quickly. This is the fastest way to lose your funds.

Mistake 2: Trusting unverified sources

Don’t rely solely on influencers on YouTube or social media. They can intentionally mislead you (this is called “shilling”).

Mistake 3: Ignoring whitepapers

Yes, they’re technical and hard to read. But they contain the truth and details about the project.

Mistake 4: Putting all eggs in one basket

Diversification is your friend. Spreading investments across multiple projects you’ve researched reduces risk.

Combining DYOR with NFA: an important duo

You might often hear about NFA — short for “not financial advice.” It means people share their opinions about cryptocurrencies but don’t give official investment recommendations.

Why is this important? Because in crypto, everyone is responsible for their own decisions. There’s no regulatory body protecting you from bad choices. That’s why DYOR and NFA go hand in hand: you must conduct your own research (DYOR), understanding that any information you get isn’t necessarily professional advice (NFA).

Where to find reliable information?

• CoinGecko and CryptoPanic: news and data aggregators
• Whitepapers: official documents on project websites
• GitHub: technical development and updates
• Chainalysis and blockchain analysis tools: for real usage insights
• Regulatory agencies: for legal info in your region
• Audits by reputable firms: smart contract security checks

Avoid listening to advice from people with a financial interest in convincing you to buy a certain asset.

Conclusion: DYOR as a constant habit

If you’re new to crypto, remember: DYOR isn’t just a recommendation — it’s your shield against losses. There’s no shortcut to thorough research and smart risk management when opening your first positions.

Give yourself time. Read documentation. Investigate the team. Verify data. Ask tough questions. And remember: if something looks too good to be true, it probably is.

The crypto world offers incredible opportunities but also great risks. The principle of DYOR is what separates successful traders from scam victims. Don’t skip this step. Your portfolio will thank you.