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The team members and their track record and background, the project roadmap, previous successes and failures, and community engagement are all valuable initial areas to explore. It’s good practice to cross-reference relevant details from several reputable sources. Thorough research helps assess the validity and potential of a project before investing, so let’s take a closer look into some key criteria on which you can assess crypto projects. This article aims to overview the research process before investing in decentralized finance projects. It references steps to take and recommended information sources.
As a result, there will be fewer misinformed investors in all projects. There’s a lot of seemingly benign misinformation on the internet, but worse than that is reports or social media posts that’s being used to actively defraud innocent people of their money. You can then apply all the techniques noted in this article to double check.
Basic and Fundamentals
It’s important that the protocol continues to hold its peg to fiat currencies throughout difficult market conditions. Whitepaper – A clear vision they want to become a leading medium-of-exchange in online payments, allowing people to transact freely at a fraction of the fees charged by other payment methods. Now that we’ve run through the process of identifying which crypto to buy, let’s run through a quick example so you can see it in action.
Projects can sometimes have unrealistic roadmaps and projections. Beware of smaller roadmaps that seem unreachable and lofty ambitious goals in short periods. A site like CoinMarketCap is essential to any crypto investor.
Many terms are often used as catchphrases or lingo in the industry, and DYOR is one of them. It stands for “Do Your Own Research.” It is one of the most popular catchphrases in the crypto world. ● Blockchain & Crypto specific news, updates, tips, contest alerts and more.
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A couple of weeks ago, the crash of two linked cryptocurrencies caused tens of billions of dollars in value to evaporate from digital wallets around the world. Earlier this month, the crash of two cryptocurrencies caused a crash felt around the world, as seen here at a crypto exchange in Seoul. Total Value Locked – Terra has a TVL of AU$19 billion, which is the second-highest amount of any blockchain.
Bitconnect encouraged users to trade crypto assets such as Bitcoin for BBC and lend BBC out to earn interest. His quest of finding a good asset begins by searching, rather than researching. Bob visits Bitcointalk, a crypto subreddit, or Crypto Twitter discussions, to figure out which coins are trending as of lately. Within that journey, he encounters users who advertise their assets to others in order for their own portfolio to rise. Alternatively, those users might be part of a project’s marketing team who talk about the project for the purpose of raising awareness. TA can help when you buy or sell crypto for a short or long period.
Utility Token
If you wanted to look up exactly how much money the popular crypto shills charge for a post, crypto sleuth @zachxbt has helpfully put together a database showing just that. While one may get lucky once or twice, trying to find profitable projects to invest in by listening solely to influencers is remarkably difficult, if not impossible. And on the face of it, promoters and shills encouraging their followers to do their own research is a step in the right direction . Unfortunately, the ways in which some of these promoters use DYOR is less than legitimate.
- Identifying which projects are ripe for investing accounts for a significant portion of DYOR.
- Given that it already has a market cap of tens of billions of dollars, it’s unlikely to rise 1000% in a week like some small-cap coins.
- Last but not least, investors are welcomed to DYOR by meddling with fundamental analysis.
- And since this process of research is a stringent process over some days.
- If lucky, he might have truly struck gold but as we said, that is sadly a rare occurrence in the sometimes predatory world of investments.
- For example, let’s say that a new investor called Bob joins the cryptocurrency market by creating an account on Binance and funding his account.
The statement “Powered by Polkadot” on many projects’ sites is often a cause of confusion. This usually means that the project is building, or intends to build, on the Polkadot ecosystem, usingSubstrate. Get the latest crypto news, updates, and reports by subscribing to our free newsletter. Top 15 Football Fan Tokens by Daily Average Trading Volume Brazilian club’s Santos FC is the most-traded football fan token, with a daily average trading volume of $17.2 million in October 2022. To verify a transaction, users will need to pay a fee in the native coin of the blockchain.
DYOR is often used as a disclaimer when crypto influencers and traders make public posts or share their market analyses on social media platforms. In crypto, DYOR reduces the number of uninformed investors and encourages them to understand dyor meaning crypto a cryptocurrency before plunging in. This way they can know precisely why they are buying or supporting that project. DYOR, as popularized by crypto enthusiasts, is a common phrase used in crypto investing and trading.
NFT
As cryptocurrency investors, you can be fooled by such deceptive advertising and wind up investing in the coins that an individual is only promoting for his or her own gain. But that does not mean that all well-designed sites are also solid projects. Many projects that do not have any plans to build anything substantial still have excellent, or even beautiful-looking, sites. They put many resources into how they present themselves visually to mislead. So, an excellent site does not necessarily indicate a legitimate project, a poor site might indicate an illegitimate one, but the site quality alone usually is not enough to reach a conclusion.
Company shares or bond issuance can be compared to token supply and distribution in the crypto space. Even though every month, more and more exciting projects appear on the crypto market, many of them have signs of plagiarism, fraud, and impossible returns. At BullPerks, we only prioritize projects with real value and a chance to succeed in the crypto market.
When analyzing the project, you need to focus on the project’s token economics. Visit the project website, download the white paper, view the roadmap and get to know the members of the team. As the crypto market is in such a mess, is it possible to rely solely on opinion leaders or recommendations by others to make a decision? Otherwise, you can also look up a blockchain explorer of that cryptocurrency. For instance, with the sweeping popularity of the NFT Worlds project, a couple of interviews with ArkDev had come out.
It’s important to remember that figures can change quickly in crypto, so it’s a good idea to periodically check these metrics as you manage your crypto portfolio. Team – Terra was founded in January 2018 by Daniel Shin and Do Kwon. Kwon then took on the position of CEO of Terraform Labs, the company building Terra. Both have proven successful as entrepreneurs, while Kwon also worked as a software engineer for Microsoft and Apple. They have both the technical and business expertise to build a successful crypto project. To research cryptocurrency in even more depth, check out our article on the three types of cryptocurrency analysis.
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So you need to understand if the coin is inflationary or deflationary. It will also be useful in double-checking the validity of important data. And since this process of research is a stringent process over some days. Note keeping from scratch will help you go back to old notes, it allows you to fill in information gaps from new articles and videos.
All of these things are well and good to consider when evaluating. You don’t need to have an economics background to understand some of the basic tools to check the health and investment potential of a token. There is no standard release for any project, but several key metrics are important to note and keep in mind.
The role of fundamental analysis in DYOR
None of these metrics are sufficient alone; you need to look into all of them to make an educated decision. The circulating supply of a cryptocurrency can increase or decrease over time. The distribution of the circulating supply is important to recognize who controls the supply of the tokens.
Although plagiarized crypto projects can bring in quick profits, they have no real value and no chance to become truly successful. You can verify the project’s uniqueness by reading its whitepaper and other technical documents. You’ve learnt how to do your own research and identify which crypto to buy now. https://xcritical.com/ You’re well on your way to building an impressive crypto portfolio filled with exciting digital assets. The journey isn’t over once you’ve made your crypto investment. Given that it already has a market cap of tens of billions of dollars, it’s unlikely to rise 1000% in a week like some small-cap coins.
A consistently high trading volume suggests a thriving project, and investors look out for this as proof of sufficient demand and liquidity as well. The trading volume of an asset shows the collective value of the asset bought and sold over a period of time. Beyond the overall 24 hour trading volume, you can also look into the 24 hour volume of specific asset pairs on individual exchanges listed on CoinGecko. A project’s financial metrics include data on the traded asset, liquidity, and supply mechanisms.
So for a person who is more or less familiar with the crypto field, for them understanding the team videos would not be that difficult. The best way to get a grasp over the actual ideas behind a particular project is to hear it out from the team itself. So in these kinds of videos, you get first-hand verbal clarification from the team, and this makes your Understanding more holistic.