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Investing 3 min read

DYOR Checklist: How to Research a Coin Before You Buy

Don't blindly follow the hype. Use this 3-step framework to vet cryptocurrency projects and spot scams.

Key Takeaways
  • DYOR (Do Your Own Research) is your best defense against scams.
  • Check the Team, Roadmap, and Utility first.
  • Analyze the 'Tokenomics' (Supply & Distribution).
  • Verify community engagement-bots don't buy coins.

Investing in crypto is exciting, but it's also a minefield of scams and "sh*tcoins." Before you put a single dollar into a new project, you need to act like a detective. Follow this 3-Step Framework to vet any coin.

1

General Information (The "Vibe Check") 🕵️‍♂️

Start with the basics. If a project fails here, walk away.

  • Website & Whitepaper: Is the website professional? Does the "Whitepaper" clearly explain the problem they are solving, or is it just buzzwords?
  • The Utility: Does the coin actually do something? Is it solving a real-world problem, or is it just a meme?
  • The Team: Who built it? Are they public (doxxed) with LinkedIn profiles, or anonymous cartoons?
    • Note: Anonymous teams aren't always bad (e.g., Bitcoin), but they are much higher risk.
  • Partnerships: Are the logos on their site real? Google the partnership to see if the other company announced it too.
2

Technical Data (Tokenomics) 📊

This is where you check the financial health of the coin. You can find this data on sites like CoinMarketCap or CoinGecko.

  • Market Cap:
    • High Cap: Safer, less volatile (e.g., Bitcoin).
    • Low/Micro Cap: High risk, potential for high reward (or total loss).
  • Circulating Supply vs. Total Supply:
    • If only 10% of tokens are circulating, what happens when the other 90% get released? (Hint: The price usually drops).
  • Distribution: Red Flag Alert! 🚩 Check the "Holders" list on a block explorer. If the top 5 wallets hold 80% of the supply, they can dump on you at any time.

The Golden Rule of Crypto

Be wary if the founders or team hold a massive percentage of the supply (e.g., >30%). Legit projects usually vest (lock) team tokens for years to prove commitment.

3

Markets & Community 🗣️

A coin needs liquidity and people to survive.

  • Exchanges: Where can you buy it? Coins listed on major exchanges (Binance, Coinbase) have passed some level of vetting. Coins only on decentralized exchanges (DEXs) are riskier.
  • Community Engagement: Check their Discord and Twitter.
    • Are people discussing the technology? (Good)
    • Or are they just spamming "When Moon?" and "LFG"? (Bad)
    • Check for bots. 100k followers with 5 likes on a post = Fake Community.

Pro Tip

The "Too Good to Be True" Rule: If a project promises guaranteed daily returns or sounds like a magic money machine, it is a Ponzi scheme. Run.

By following this checklist, you move from "Gambling" to "Investing." Take your time, stay alert, and never invest more than you can afford to lose.