BLOCKCHAIN RESEARCH

What is a Vampire Attack in Crypto?

Well, actually a Vampire Attack is a method in DeFi where one protocol offers better rates than another protocol, stealing their customers and investors.

I believe most of our reader has had a girlfriend or a boyfriend at one point or another in their lives. The majority of crypto investors are men, I will continue the sampling with girlfriend. 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 the Uniswap. They flirted with Uniswap’s liquidity providers but more on that in the rest of the article.

What was the infamous vampire attack?

Essentially these are pools of money that allow traders to trade. The traders pay a very small fee that goes to the investors who actually supply the initial amount of money so that they could trade. So it creates a win-win situation the investors earn rewards while the traders actually get to trade without having to find someone else to trade with. To put it simply a vampire attack is when one DeFi protocol offers better rates to attract investors from another platform. Now one of the most famous vampire attacks happened with SushiSwap, they were simply able to offer one of the best liquidity provider rates to any investor on their platform. Doing so meant a lot of people pulled their liquidity or their money from Uniswap and then put it in SushiSwap instead.