DYOR- Do Your Own Research

5 July - Written by Luciano Rossi
How to DYOR (Do Your Own Research)
1. General research:
Try typing in the asset’s name AND go at least 5 pages deep into Google, open anything interesting written by the project’s team and from independent sources, proof check everything.
Ask yourself:
- Where does this project get its value?

- Does it have the potential to grow over time?

- How it will generate revenues ?

- What exchanges is the crypto on?

- Who is the crypto partnered with? What do the partnerships actually mean?

2. On-Chain:
On-Chain metrics can get pretty complicated, but you can check most of these details on CoinGecko and CoinMarketCap, as well as block explorers.

Market capitalisation:

Look at the crypto’s market cap to help you consider the potential for its future growth. Projects with larger market caps usually have less growth potential than lower cap projects. So, if you invest in a crypto that already has a huge market cap, it will be harder to get a
significant return. However, note that projects with larger market caps are generally considered to be less risky.

Usually:
- Large Cap: > $10B (these tend to be more established, less risky, and move the least).

- Mid Cap: >$1B & < $10B (relatively established but more volatile than large-cap, and prices change more often, which means they often have more potential upside but equally more risk).

- Small-Cap: <$1B & >$100M (higher risk and more volatile than mid or large-cap).

- Micro-Cap: Usually <$100M (usually relatively new and the riskiest, but also may be most profitable for early investors).

Maximum & circulating supply:
What is the maximum supply? Does it have one? (some cryptos don’t, i.e. are with an open emission which tends to be inflationary, like printed government money such as USD and EUR, from a monetary point of view closed emissions like BTC are deflationary, i.e. tend to gain value with
scarcity).

What is the circulating supply? (What is the number of tokens currently
in circulation?)

The basic laws of supply and demand have a significant effect on a crypto’s price, so having at least a basic understanding of what circulating and maximum supply is will help to give you an idea of how much demand is necessary to increase the price.

The circulating supply is the number of tokens that have been issued so far (the number of tokens currently in the market). The maximum supply is the total number of tokens that will ever exist.

What is the difference between the circulating and maximum supply? If there is a big difference between the two, where are the remaining tokens and how will they be deployed?

Transaction count/value & active addresses

Also, take a look at the active addresses and transaction count/value to get an idea for the use of the project.

- Transaction count offers an indication of how much activity is taking place on a network. However, note that this should be taken with caution as there’s no way to tell that it isn’t just one party transferring funds to increase the activity.

- Transaction value tells us how much has been transacted within a certain period of time.

- Active addresses refer to the blockchain addresses active in a certain period.

Wallet holders

Check the wallet holders of the token to make sure that no single wallet/individual owns too much of it (to avoid whale manipulation). If a few investors, or team members, hold a large amount of the tokens, it adds a high potential risk. They could have excessive swing over governance, or control the price by pumping and dumping to suit them.

3. Project website

Click on and read through all the links on the project’s website.

While having a great website isn’t completely necessary, a terrible website is typically a red flag. Pay attention to the finer details, spelling and grammar mistakes are usually not a good sign either.

The website should clearly define what the project is, what its goals are and what its value proposition is upfront. If you can’t easily understand what the project is trying to do, or the information is confusing or vague, that’s not usually a good sign.

Go as deep as you can into the project’s website to try to understand exactly what the project is. Be critical about the project, the team, their promise and whether they’re actually delivering on it. Look for the reasons why it may not be a good investment rather than blindly convincing yourself it is. Think of it like a business and ask yourself whether you would really want to back it.

Note the project’s partnerships and backers, and research those too. Partnerships are important for adding value to a project. However, make sure to understand the details of the partnership before making a judgement.

Ask yourself:

- What is the website like?

- Does the website clearly state the project’s purpose?

- Are there any red flags?

- Who is the project partnered with?

- Do they have a Project’s blog?

- Are the community and the devs active or is it just a money grab being
abandoned?

4. Whitepaper

One of the most important things to look at when carrying out a fundamental analysis of a crypto is its whitepaper.

A whitepaper is basically the crypto project’s business plan. It is a detailed proposal written by the development team outlining the purpose and design of the project. It will typically include information about the team behind the project, the tools and technology used by the project, tokenomics, consensus mechanism, future goals, partnerships and use-cases.

A good whitepaper should have a clear explanation of the project's goal. Do you understand exactly what the project is trying to do? If it’s not clear, it may be a red flag.

Make sure to read through, scrutinise and understand all of the claims and promises made in the whitepaper. Be as critical as possible. This is essential to fully understand the project.

Try to also understand the current stage of the project’s development. Consider what this project is doing differently: what will set them apart or make them successful?

A whitepaper can offer a lot of information about the project and is where many red flags such as bad tokenomics, unrealistic promises, and an unclear roadmap can first be highlighted.

When looking at the whitepaper, also pay close attention to the project’s tokenomics and distribution model. If the tokenomic model isn’t good, you can rule it out as an investment!

Note that it’s a good idea to try and cross-check the information you find within the whitepaper with outside discussions about the project. Consider what other people are saying about it and whether there are any red flags.

Ask yourself:

- Is the Whitepaper well written?

- Does the Whitepaper clearly state what the project is trying to do?

- What does the tokenomics and distribution model look like?

- What stage of development is the project at? (Do they have a beta
version available?)

- What will set this team/project apart or make them successful?

Resources:

- Whitepapers can typically be found on the crypto project’s website

- Otherwise, check out allcryptowhitepapers.com

And now that you DYOR, always remember that MCWYP: Macroeconomics Could
Wreck Your Portfolio!
Luciano Rossi
The following technicians have cooperated in developing the LRHJ, a.s. website, and we would like to thank them: Samuel Kovár, Luca Vizzi, Barbora Gajdošová, and BigWay.sk
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