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How to Do Your Own Research (“DYOR”)?
DYOR (Do Your Own Research) is the process of delving into the fundamentals of a project before investing in it. Doing this helps you to identify the right project to participate in and avoid rug pulls. It is vital for the fast-paced digital collectibles market, where new projects are frequently launched.
- Preliminary evaluation
- Art appreciation, collection size, mint price, and foundational project elements
- Project value proposition
- Is there any future utility like a game, token, bonus airdrops, breeding mechanics, or exclusive access/memberships that would potentially lead the project to further success?
- Smart contracts can allow certain conditions to be automatically triggered. For example, royalties being paid out to the creator when their NFT is resold. Make sure you research the contract itself before participating in the project.
- The team
- It’s fine for the project’s creators to remain anonymous, but ensure that they have experience in the NFT world, passion for what they’ve conceived, and the relevant skills or background. These can include graphic design, coding, and even fine art.
- Are the project’s creators active on social media? Do they actively provide links to their various public-facing pages? This allows you to determine whether they have built up a good reputation among cryptocurrency and NFT enthusiasts. The trust they’ve gained goes a long way, even if they decide to remain anonymous.
- Look through the project’s website. Key factors that you can use to evaluate the project include its roadmap, team, overall thoughtfulness, and quality of the website. A team that spends a lot of time making sure their website and social media pages are consistently sending the same message and free of errors is often indicative of the project’s quality.
- You can also evaluate whether the team is actively responding to participants’ concerns on social media.
- A well-articulated plan can put collectors at ease before they buy into a project. Every collector has their own criteria for a “good” roadmap, including royalties, utility, project tokens, charity donations, merchandise, and community spaces.
- Did the team deliver what they’ve announced? This creates confidence in their ability and allows collectors to trust them.
- If the project’s website is haphazardly put together while containing a vague roadmap, it might be a rug pull.
- Project competitor(s)
- How are the project’s competitor(s) performing?
- Comparing in terms of popularity, art style, and mint price, are there any similar project(s) launching in the same period of time?
- Additionally, are there any identical projects in the secondary market or an upcoming mint? Is the project you’re interested in just a carbon copy or is there something unique that adds value to it? If you can’t answer that, it’s probably worth passing up and participating in another project.
- Project community
- Does the project have a large and active Twitter following? How about the size of its Discord community? Having a huge number of followers on social media isn’t essential for a project to succeed, but it does offer credibility. Because of the prevalence of ‘paid promoters’, it can be challenging to evaluate the authenticity of a project. Be aware of followers-for-pay scams and programs that can artificially inflate the follower count of a social media page. Most importantly, do look at the quality of the project’s followers on social media. Are their profiles authentic or do they appear more like bots?
- Remember, never spend more money than you can afford to lose. This applies to both digital and physical collectibles.
No one knows everything in the NFT world, but it’s important to stay vigilant to protect your assets from bad actors and unscrupulous projects. Always DYOR and have a great time building up your NFT collection on Minted!