The modern market of blockchain protocols has an active and even fierce competition. A is fair, so the creators of new projects from time to time use not the most ethical methods for the promotion. One such strategy is called the "vampire attack". Let's take a closer look at what it is and find out if you need garlic and wooden stake in order to fight it.
Why do vampire attacks happen?
Nowadays it is very difficult for a young blockchain project to break through and become visible in the global crypto space. This requires a unique and relevant idea that would interest a potential client at first sight. As well as advantageous offers, a wide range of services, a user support program set up and much more. All this requires a lot of effort, and the path of becoming a successful project is usually a long one, unless... Unless it is built in someone else's, already-made path.
How do vampires attack?
Such an original name appeared due to the principle of “sucking” investments and customers from a successfully developing blockchain. The “vampire” project is created in the image and likeness of the original, but at the same time it offers more favorable rates and/or creates an additional reward system, which lures customers.
The classic vampire attack takes place in 3 stages:
- A new project chooses its “victim”. Usually, it’s a company with a good client base, preferably one that occupies a leading position in the market.
- A new crypto startup recreates a chosen project, using its business model or code.
- Finally, the “vampire” project begins to pull the audience of the leading project by distributing its own tokens and providing better rates for trading.
The vampire attack helps to take from the original protocol the audience, liquidity (namely, clients' money), and trading volume (the combination of the audience factor and the liquidity factor).
The vampire attack on Uniswap
In 2020, a case of a vampire attack from the SushiSwap (SUSHI) project was seen in the DeFi space. The victim was the Uniswap (UNI) decentralized exchange, which just gained great popularity in 2020: its trading volume at that time reached $1.8 billion. Initially, SushiSwap was created as a fork of Uniswap, and the developers did not hide this fact. But no one imagined that the new protocol would create its own SUSHI token and distribute it to its users as a reward for farming on pools, encouraging liquidity providers. As a result, SushiSwap attracted about $1 billion in just 2 weeks – funds owned by Uniswap.
Blogger and crypto-enthusiast Omer Keman compared this attack to the following situation. He writes:
“Let’s say, you just got a new girlfriend and for some reason, your best friend wants to take both of you out to dinner. Given he’s your friend you don’t see any harm. However, you notice while you’re at dinner that he is sending signals to your girlfriend and basically flirting with her. This is a metaphor for what SushiSwap did to Uniswap."
"Fresh blood" of OpenSea
Another major vampire attack happened not so long ago, in 2022. The most popular NFT marketplace OpenSea, where the majority of NFTs are now traded, has been hit.
Back then a new young player appeared on the crypto market – the LooksRare (LOOKS) platform. Unlike SushiSwap, LooksRare developers did not copy OpenSea smart contracts, they honestly wrote their own. They also created LOOKS tokens, which were issued to users for being active in the auction. And everything seemed fine, but soon appeared a condition that has uncovered all the “darkness”: every customer can use the new platform, but only those who traded on OpenSea from June to December 2021 can get LOOKS. Low commissions, favorable conditions and that's it – the audience of OpenSea quickly migrates to a new promising marketplace.
Vampire attack: is it really that bad?
The main goal of vampire attacks is to get a significant part of the capital and audience from a competitive project and thereby take a leading position in the market. In fact, carrying out such attacks would be impossible if it was not for the transparency policy of DeFi applications with their open codes. On the one hand, open source gives the user the opportunity to see the security and functionality of the project, but on the other the security of the project suffers from this. Surprisingly, vampire attacks also have a positive aspect – they indicate to developers the weaknesses of the security systems of their projects, both technical and ideological.
If you want to learn more interesting facts about crypto then don’t forget to check out our blog! You might like our articles “The Euler Finance Saga” and “What Is a Zero-Day Exploit”.
