What Is DYOR?

Doing Your Own Research (AKA DYOR) is just what it sounds like. For those putting real money on the line, simply “APEing” into a project because of your friends might produce a win from time to time, but taking your DYOR skills to the next level could help you land that next 1000x – or at the very least, avoid the next Rug Pull!

Before You Start Researching Crypto Projects

Is it even worth your time to DYOR on the token in question? Every day, thousands of coins are created in the crypto ecosystem. Believe it or not, over 1 million coins were created in April 2024 alone. Many of these coins are valueless, but even those that make their rounds on Twitter and have some compelling price action may not be as legitimate as they seem. Oftentimes, a coin’s value as a meme alone is enough to catapult it into the stratosphere—at least long enough for early adopters to sell their bags. 

Memecoins and low-effort NFTs aren’t necessarily launched with malice but often with an irreverent attitude of “sounds fun” attached to them. Dogecoin embodied this well in 2013. It was launched as a satire with tokenomics counter to Bitcoin’s value proposition of “will never have more than 21 million coins”. But not every memecoin is Dogecoin, and not every NFT is the next 1000x.

Before you DYOR, you must ask yourself a few questions. First of all:

What is your risk tolerance?

Investing in Crypto tokens carries inherent risks. The common mantra is, “Don’t put anything into crypto you can’t afford to lose” but the truth is more nuanced than that. The most popular cryptocurrencies, such as ETH or BTC have long histories. Plus with the introduction of spot ETFs for both coins, their chances of going to zero are much smaller than those of a meme coin launched on Twitter yesterday.

How much time do you want to spend on crypto? 

Like any asset class, the alpha and outsized returns usually go to those at the cutting edge of technology, deal-flow access, and knowledge. Although crypto democratizes much of that access, you probably have little knowledge of the potential value of an asset unless you’ve spent years honing your crypto research skills. Buying an established coin such as Bitcoin or Ether is less risky than buying app tokens, NFTs, or memecoins.

Does it make any sense at all? 

Some of the best crypto investments were often hard for many people to understand, but most were pretty straightforward. Uniswap and Aave (formerly ETHLend) were rather straightforward, acting as decentralized versions of their traditional Finance counterparts. If it can’t be explained simply, or you don’t understand it, there is a good chance a lot of people won’t either, so best to avoid it! The ensuing price action of whatever you buy is anyone’s guess, but the fundamental concept of whatever you buy must make sense, even if the price is a bit subjective!

Where To Start With DYOR?

Once you’ve decided the kinds of things you are interested in, your level of time commitment, and the risks you are comfortable with, you’re ready to research! Opportunities will come at you left, right, and center, and you’ll have to decide which of them have legs, which might be worth the risk, and which are total duds or outright scams!

Social Media

A cursory glance at a project’s social media and blockchain activity can be telling. Scrolling through Twitter followers and checking engagement to see if it’s real can be a quick litmus test of the project’s character and those involved. If they are willing to fake engagement, what else are they faking? But this is only the tip of the iceberg. 

Finding out all you can about the founders, even if it is just their post/tweet history or associated crypto wallets tied to social media, can go a long way if you know what to do with them! One of my favorite things to do if a founder’s account creation date is earlier than their first tweet on Twitter is to use the Wayback machine! You might find some questionable posts that the founders deleted that could reveal more about their character and history.

On-Chain

Diving into on-chain activities is like becoming a detective in the crypto world, but you don’t need to be a tech wizard to start spotting the red flags. 

For instance, tools like Etherscan are your magnifying glass, allowing you to follow the money trail and sniff out dodgy dealings, like funds moving through mixers. Keeping an eye out like this can really sharpen your skills in spotting trouble.

And while investigating smart contracts might sound intimidating, there is a lot you can uncover, even if you don’t know how to code! We’ve even put together a whole Ledger Quest experience on this.

In Boring Security’s Solana 101 class, we often suggest users look into RUGCHECK, and our class offers context on what some of those red and green alerts mean when researching a token. There is also a tool called Metasuites that can give you more information about a particular Ethereum wallet address or contract, such as “Was it funded by a mixer address?” by enriching the data from Etherscan with more context and options.

Conclusion

In the rest of this module, we will discuss the four major pillars of DYORing most projects.

Becoming an expert in understanding red flags in all areas and predicting a potential success is difficult, but it helps to have a group you trust to help sift through the noise. Make friends and join communities, and over time, you’ll eventually find folks you can trust to pool resources and share experiences with. Good luck out there, and read on!

This article was written by Feld from Boring Security. Follow him on X here, and check out Boring Security’s X account, Discord server, and official website for more information.

Stay tuned for the next article in this series where Beau dives into how to identify reliable sources of web3 information.