What are vampire attacks in crypto?

• Vampire attacks in crypto are aggressive plans where a new project, often a copy of an old one, offers better deals to attract users and their money.

• These attacks mostly go after projects that really depend on users giving them money, like decentralized exchanges and yield farms.

• While they are not always bad, vampire attacks can cause the project being attacked to lose a lot of money, which could make it fail.

In the crypto world, a "vampire attack" refers to a tactic where a new project—often a modification of an existing one—offers better conditions or rewards to attract users from the original project. The goal is to make them loyal to the new project and move the money they put in to this new business. This approach is commonly used in the decentralized finance (DeFi) sector, which depends heavily on liquidity provided by users.

The term "vampire attack" comes from the way these new projects drain liquidity from the originals, metaphorically "sucking the life" out of them. It's important to understand that these attacks aren't necessarily scams or malicious. Instead, they are viewed as aggressive, competitive strategies for growth in the cryptocurrency market.

Vampire attacks often target projects that rely heavily on users and the liquidity they provide. These projects include decentralized exchanges (DEXs), automated market makers, nonfungible token marketplaces, and yield farms. The new project conducting the attack will typically propose substantial benefits, such as airdrops and aggressive marketing, to the existing project's community. The goal is to encourage users to consider reallocating their liquidity from the existing project and quickly increase their own liquidity pool.

A successful vampire attack in the crypto world can have major effects. The project being targeted might lose a lot of its liquidity, potentially leading to its collapse. Meanwhile, the project launching the attack could quickly gain more users and increase its liquidity pool.

However, it's important to note that not all vampire attacks succeed. Some projects are able to resist these attacks, keeping their users and liquidity intact.

Preventing vampire attacks can be challenging due to the open and competitive nature of the crypto space. However, projects can take certain measures to protect themselves.

These include continuously innovating and improving their services to retain their user base, proposing competitive conditions and benefits, and maintaining a strong security track record.

Users, on the other hand, should be careful of new projects that offer big benefits and should do careful research before thinking about moving their money.

The crypto space has witnessed several instances of vampire attacks.

One notable example is the attack by SushiSwap on a well-known decentralized exchange in August 2020. SushiSwap, a fork of the aforementioned exchange, managed to attract a significant amount of liquidity away from it by proposing more appealing conditions to users.

However, it's important to note that despite this attack, the targeted exchange managed to recover and continues to be a recognized player in the decentralized exchange sector.