Investing in crypto can be highly rewarding, but it also comes with risks. From rug pulls and pump-and-dump schemes to scam tokens and manipulated hype, the crypto space is full of traps that can wipe out your money in seconds. This is why the golden rule of crypto investing is:
DO YOUR OWN RESEARCH (DYOR).
DYOR is more than just a slogan—it’s the foundation of making informed, profitable, and safe investment decisions. In this guide, we’ll break down the key steps to properly researching a crypto project before you invest your hard-earned money.
1. Understand the Project’s Purpose & Narrative
Before investing, ask yourself:
- What problem does this project solve?
- Is it innovative or just another copy-paste token?
- What is its narrative? (Meme coin, DeFi, AI, Layer-2, GameFi, etc.)
Every successful crypto project has a strong use case or a powerful narrative driving it forward. Projects that follow trending narratives (e.g., AI tokens in 2023, Meme coins in 2024) have a higher chance of pumping, but utility-driven projects last longer.
Example: Ethereum ($ETH) revolutionized the industry with smart contracts, while meme coins like $DOGE and $SHIBA thrived on community hype.
2. Analyze the Team Behind the Project
A strong, doxxed (publicly known) team adds credibility to a project. Always research:
- Who are the founders and developers?
- Do they have past experience in crypto or tech?
- Have they worked on successful projects before?
🚨 Red Flags:
❌ Anonymous developers with no track record
❌ Fake LinkedIn profiles or no online presence
❌ Founders linked to past rug pulls or scam projects
Example: Solana’s ($SOL) co-founder Anatoly Yakovenko was a known figure in tech before launching the blockchain, which increased trust.
3. Examine the Tokenomics & Supply Model
Tokenomics is one of the most important factors that determines an asset’s price potential.
Key Metrics to Check
- Total & Circulating Supply – A lower supply often leads to higher prices if demand grows.
- Market Cap vs. Fully Diluted Valuation (FDV) – Compare the actual market cap with its fully diluted value to avoid overvaluation traps.
- Inflation Rate & Token Distribution – Check if tokens are released gradually or dumped at once.
🚨 Red Flags:
❌ A massive supply with frequent minting (causes inflation & price drops)
❌ A high percentage of tokens held by the team (they can dump on investors)
❌ Locked liquidity or suspicious token allocations
Example: Bitcoin ($BTC) has a fixed 21M supply, making it deflationary, while some meme coins have quadrillions of tokens, leading to lower prices.
4. Check the Community & Social Media Presence
The strongest crypto projects thrive on community support. Here’s how to check if a project has real backing or just fake hype:
Where to Look for Community Strength
- Twitter/X Engagement – Are people actively discussing it? Are there real interactions, or just bot comments?
- Telegram & Discord Activity – A strong project has an active and engaged community, not just admins talking.
- Reddit & Forums – Platforms like r/CryptoMoonshots or Bitcointalk provide early insights into new gems.
🚨 Red Flags:
❌ Fake engagement (thousands of followers but no real discussions)
❌ Paid promotions and influencers shilling without actual research
❌ No organic community interest
Example: $SHIBA INU exploded because of strong grassroots support on Twitter and Reddit.
5. Study the Roadmap & Whitepaper
A legit project has a clear roadmap detailing its future plans. When reading the whitepaper:
🔹 Is the vision realistic? (Or are they promising the world?)
🔹 Are the milestones achievable?
🔹 Does it explain the project’s tech in detail?
🚨 Red Flags:
❌ Overpromising (e.g., “We will be the next Bitcoin”)
❌ Copy-paste whitepapers from other projects
❌ No clear development updates
Example: Ethereum ($ETH) had a clear roadmap for smart contracts, while many scam projects make unrealistic claims.
6. Review Smart Contract & Security Audits
Smart contract vulnerabilities can lead to hacks and rug pulls. Here’s what to check:
- Has the project been audited? Top audit firms include: CertiK, SlowMist, PeckShield
- Check the contract on Etherscan/BSCScan:
Is the contract renounced? (Renounced contracts prevent changes that could harm investors)
Are there suspicious functions like infinite minting?
🚨 Red Flags:
❌ No smart contract audit or fake audits
❌ “Mint” or “Blacklist” functions in the contract (Dev can create tokens or block wallets)
Example: A project without an audit, like Squid Game Token ($SQUID), rug-pulled investors by blocking withdrawals.
7. Look at Exchange Listings & Liquidity
If a project has no liquidity, selling your tokens will be impossible. Always check:
- Where is the token listed?
Binance, Coinbase, Kraken – Safer, regulated exchanges
Uniswap, PancakeSwap – DEXs that allow early buys but with more risk - Liquidity Pool Depth
High liquidity = Easier to trade, less price manipulation
Low liquidity = Risk of price crashing when whales sell
🚨 Red Flags:
❌ No CEX listing or low liquidity on DEXs
❌ Devs control the liquidity (they can rug-pull)
Example: SafeMoon had low liquidity at first, leading to major price crashes when big holders sold.
8. Watch for Insider Moves & Whale Activity
Whale wallets often control price action. To track them:
- Use Lookonchain & Arkham Intelligence to monitor big wallet movements
- Check for insider buying before exchange listings
- Follow smart investors & their trades
🚨 Red Flags:
❌ Developers selling large amounts early
❌ Whales dumping before major announcements
💡 Example: Many insiders sold before LUNA collapsed, signaling a disaster.
Final Thoughts: Be Smart, Stay Safe!
DYOR isn’t just about avoiding scams—it’s about making smarter, more profitable investments.
Key Takeaways:
- Understand the project & its narrative
- Research the team & tokenomics
- Check the community strength & roadmap
- Review security audits & smart contracts
- Monitor liquidity, listings, and whale activity
By following these 8 steps, you’ll drastically reduce your risk and increase your chances of finding solid, long-term crypto investments.
Remember: The best investment is knowledge—never invest blindly! 🚀
