Do your own research (DYOR). We hear this constantly in the web3 world, and for good reason. You should research each project you invest in, from NFTs to cryptocurrencies. Before spending money make sure what you’re spending it on is worthwhile. It’s simple. But how do you actually carry it out? How do you go about doing your own research? Let’s claw in.
Basic Crypto with the Beasts: What is DYOR (Do Your Own Research)?
You can ask four basic questions to get to the bottom of any project. At the very least, it’s an excellent start for DYOR. Before spending money, ask these questions and seek out the answers:
- Is it art?
- What problem does the project solve?
- How strong is the team?
- What is the market potential?
Know this: it’s easy to make a website look professional. Moreover, as a professional copywriter, if a writer is on the team, it’s just as easy to make any project look legit, even a potential rug.
Ultimately, these questions will help you look closer at the project’s information and discover its true potential. Look at a whitepaper if it exists. Browse the project’s website, Discord, or GitHub. Look up social media accounts on LinkedIn, Twitter, and others. And if you’re feeling particularly investigative reach out to team members and chat with them.
Let’s quickly break down these questions and why they matter.
Is it art?
If the project’s primary focus is art, all bets are off. Hype Beasts, for example, is a generative AI art project, and our focus is on gallery-quality art. We do offer some utility but our primary focus is different. We’re also not promising the value of our NFTs will go to the moon.
In cases like this it’s all up to you. Do you love the art? Do you have faith in the project? If you do, go ahead and get involved.
What problem does the project solve?
All good products exist to solve a problem. The reason you buy them, the reason you continue to use them, is to solve whatever challenge you’re having. So, look at the project, whether it’s an NFT or token, and consider what it’s solving. Why does it exist?
If you cannot find a problem it addresses, that’s a red flag. If there is a problem it’s trying to solve but doesn’t do it that well — it’s not competitive — that’s a red flag. In addition, if the project promises to fix a problem in a way that doesn’t make sense or is impossible, that’s a red flag. Many scams will promise to fix, gift, or offer something that’s not feasibly possible. For example, an investment opportunity promising a super high rate of return, above what’s commonly seen in the market, is a red flag. The high returns are probably not true; if they are, it’s probably not sustainable.
How strong is the team?
You want a strong balance of experienced and new players with any sports team. Talent is essential, but true talent can be realized at all skill levels, from beginner to expert. Moreover, you want different players for each position, like a catcher versus a pitcher.
The same is true of a business team. You want a solid mix of experienced and non-experienced professionals, and you want them to come from various fields, not just web3 and development.
To research the team, look up their LinkedIn profiles if available. See what other companies or teams they’ve worked with. Have they been involved with any rugs or bad projects in the past? Have they had failed projects? How many projects do they have currently? They may jump from one to the next without investing a reasonable amount of time and effort. Alternatively, they may have a long history of successful projects, which will be their next one. Both of these scenarios are important to know.
What is the market potential?
Finally, what is the market potential of the project? If everything goes according to plan, if the roadmap and timeline are upheld, can the project succeed? Are they involved in a space or market that’s way too competitive? Will others be able to come along and achieve the same, but better?
Some of these questions are tough to answer up front, or with a project just starting. But that doesn’t mean you should dismiss them or the related answers when you DYOR. They are still very important, especially regarding your peace of mind.
It’s okay to be wrong
Even with the right amount of DYOR, there will be times when you’re wrong. The project may end up being a bad choice or a good choice; many factors determine a project’s success. The important thing to take away is that you’re not just jumping in to support projects you know very little about. Making a wise investment is more about knowing what you’re doing, who you back, and why. If it makes sense to you, then that’s all you need.
English