The term DYOR is regularly thrown around in crypto circles, often following statements as naturally as a full stop. But what does it mean, and why is it used so frequently? In this guide, we explain what DYOR is and how you can take advantage of it to be successful in cryptocurrency.
KEY TAKEAWAYS
➤ DYOR stands for “do your own research,” and emphasizes taking personal responsibility for financial decisions.
➤ It protects individuals from legal liabilities and encourages informed decision-making when making investments.
➤ To DYOR, establish clear goals, choose relevant research methods, and analyze data to draw informed conclusions.
➤ You can use traditional finance data sources and blockchain-specific tools like block explorers to gather relevant and accurate information.
What does DYOR mean?
DYOR is an abbreviation of “do you own research.” It is often written by analysts, investors, or researchers following an investment thesis or breakdown of a particular subject.
DYOR is often used alongside the traditional finance (TradFi) term NFA, a legal disclaimer that means “not financial advice,” and is an informal way of saying you are responsible for any financial decisions you make or information that you act on.
Why is DYOR important in crypto?
A phrase like DYOR is important — not only because it encourages investors to make sound decisions instead of relying on blanket financial advice — but also because it may provide legal protection.
In many developed nations, laws exist to protect consumers or mitigate civil liability from investment-related communications.
If someone provides investment advice that leads to financial loss, the injured party could sue for negligence or misrepresentation.
Even if the advice was given informally (e.g., on social media), a court might rule that the communicator owed a duty of care to their audience if the content was presented as authoritative.
Without a proper disclaimer, an audience could perceive the communicator as offering expert financial advice. If this perception leads to financial harm, the communicator could face civil suits for acting as an unlicensed advisor.
By using disclaimers, like DYOR or NFA, individuals can argue that:
- They explicitly stated the content was not advice, thus limiting the expectation of profit.
- They should not be held liable for potential misinterpretation of their analysis or opinions.
How to DYOR
Doing your own research can be simple or complex, depending on the topic and the objective. To do your own research, you must:
- Establish a goal.
- Choose a research method.
- Collect and analyze relevant data.
Establishing a goal
Before you begin researching, you must first start with a thesis or a goal. This will ensure a concrete metric for when to begin and end your research. If you are attempting to solve a problem, you should take the following general steps:
- Define the problem.
- Develop a hypothesis.
- Collect data.
- Analyze the data.
- Draw a conclusion.
If your goal is to find out whether something is true or false, such as detecting fraud or scams, use the following investigative methods:
- Gather evidence.
- Validate sources.
- Assess the motives.
- Cross-check facts.
- Follow the money.
- Draw a conclusion.
Collecting data
There are different approaches to collecting data for research. When researching companies or organizations, you may use traditional means. For web3 crypto and blockchain-related subjects, on-chain tools are more appropriate. Some research topics may also require a hybrid of both of these methods for fundamental analysis.
TradFi
One benefit to researching crypto projects and topics through traditional avenues is that TradFi regulation typically requires stringent reporting mandates. This means the quality of information publicly available is often reliable and detailed. Some of this information includes:
- Audited financial statements (balance sheets and earnings reports)
- Ownership structure
- Regulatory filings
- Legal records (licenses and registrations)
- Risk assessments
- Tax filings
An easy way to find this type of information is by using services like OpenCoprorates, the world’s largest open database of companies. It provides free and open access to data on over 220 million legal entities across more than 140 jurisdictions.
Web3
Cryptocurrency and blockchain technology is built upon transparency. As a result, information is generally extremely accessible.
In particular, block explorers are your friends. Products like Etherscan (or any blockchain-specific explorer), Tenderly, and Phalcon by BlockSec can provide extremely niche on-chain data.
What data should you collect?
You should only collect data that is useful to your goals. The key takeaway here is to look for signals and avoid noise. Not all data will be helpful; how you use the information is just as important as the data you collect.
Some of the metrics that you want to look out for are market capitalization, trading volume, supply cap, utilization rate, liquidation factors or collateral factors, interest rates, etc.
DYOR all depends on the topic at hand. A useful metric in one scenario may become a vanity metric in another. For example, when creating an investment thesis based on a coin or token’s supply and price, the market cap is good, but a fully diluted valuation (FDV) can be better.
Always DYOR
DYOR is just a quick way to say do your own research; however, encapsulated in this brief statement is both a disclaimer and a reminder to be fiscally responsible. Doing your own research requires a refined approach, but luckily, there are many tools available today to help you along the way. By relying on your own research, you are taking ownership of your financial decisions and removing reliance on any potentially misleading influencer or media opinions.
This article is for informational purposes only and should not be considered financial advise. While it’s important to DYOR, you should also consider taking financial counsel from a professional. Crypto is a highly volatile asset class. Never spend more than you can afford to lose.
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