What is a Vampire Attack? How do Vampire Attacks work?

What is Vampire Attack? Indeed, when learning about Defi, many people also have the same questions as above. Today, BHO Network will explain the term, how it works, and the pros and cons of Vampire Attack.

1. What is Vampire Attack?

A vampire Attack is the phenomenon of a platform born after using ingenious tactics to entice liquidators to move their assets from the old platform to the new platform. Because the more liquid an exchange has, the more profit it will generate for users.

2. Why was Vampire Attack born?

The "vampire attack" draws users to another trading platform. Specifically, the target of Vampire Attack is the following three factors:

• Liquidity
• Transaction volume
• Users

SushiSwap has also implemented the Vampire Attack project targeting UniSwap users. Thanks to this attack, SushiSwap achieved a more extensive user base, better liquidity, and high profitability. This further entices UniSwap users to withdraw their assets to SushiSwap.

3. How do Vampire Attacks work in crypto?

The first step of a vampire attack is to use strategies to entice users of platform A to deposit assets at the new platform B. Usually, the way to attract is to give users many attractive rewards such as giving tokens, creating Incentives,...

After receiving enough Token deposits to perform transactions, platform B transfers all those assets to their platform. Thus, liquidity was "sucked" from the old exchange to the new one. That's why projects that work like this are called vampire attacks.

Read more: What is Move to Earn? DeFi new trend details

4. Prominent Vampire Attack Projects

To understand what a Vampire Attack is, you need to study this campaign in real-life examples. Below, we will introduce you to some vampire attacks.

4.1. Uniswap and Sushiswap

The vampire Attack project made by SushiSwap is aimed at users of UniSwap. Specifically, SushiSwap entices liquidators of the other platform to deposit Tokens for them to receive many rewards. The rewards offered by SushiSwap are pretty high.

Users attracted by SushiSwap rewards should make more and more deposits. After a few hours of launching, SushiSwap's TVL reached 150 million dollars. This is one of the most successful Vampire Attacks projects on early Defi.

4.2. OpenSea and LooksRare

LooksRare is an NFT trading platform born after OpenSea. Also, using a strategy like SushiSwap, LooksRare highly rewards participating members. The platform ran an Airdrop campaign at its launch to attract users from OpenSea.

Not only stopping there, but LooksRare also launched Token when OpenSea was unavailable. All transaction fees will be divided among LOOKS Holders, along with rewards. Thanks to such smart strategies, LooksRare almost surpassed OpenSea in terms of revenue, although before that, OpenSea dominated the NFT market for a long time.

4.3. X2Y2 and OpenSea, LooksRare

X2Y2 is also an NFT platform implementing a Vampire Attack project aimed at OpenSea. Like LooksRare, X2Y2 also Airdrops to OpenSea members up to 12% of the total Token supply. In addition, X2Y2 makes it easier for users to Airdrop than LooksRare, by learning from the vampire attack.

4.4. 0xDAO and veDAO

0xDAO and veDAO are both decentralized autonomous organization projects. Realizing the disadvantages of senior veDAO, 0xDAO has implemented a Vampire Attack on veDAO to bring users back to its platform. After only 4 hours, 0xDAO quickly surpassed veDAO, taking the top spot of DefiLlama.

5. Responses to the vampire attack

Vampire Attack is no longer strange to the crypto community. To have a more in-depth look at the Vampire Attack concept, we have gathered some views from investors.

5.1. Project perspective

Defi is a new market with potential for growth and room for improvement. Each of the following platforms has learned from the "elder" who came before, more creative, bringing more convenience to users. In other words, Vampire Attack will contribute to the development of the market, creating many excellent new projects.

5.2. From the perspective of investors

Thanks to the ability to attract liquidity, the Vampire Attack brings investors a lot of profit. The way to engage users of the vampire attacks is to thank the project's first supporters with a well-deserved reward. However, users should thoroughly understand the project model to avoid fraudulent and profiteering behaviours.

Read more: What is Liquidity Pool? All you need to know about Liquidity

6. How to prevent Vampire Attacks?

Also, many pre-launch platforms feared Vampire attacks because Defi always has fierce competition. Here, BHO Network would like to introduce some solutions to prevent Vampire Attacks:

• Adding a lock time makes it impossible for liquidity providers to withdraw capital quickly within the specified time.
• Limit the number of Tokens a person can draw in a given time, preventing mass migration.
• Apply a voting mechanism to predict which platform users want to use.

7. Pros and cons of Vampire Attack

First of all, the advantage of Vampire Attack is that this project offers better rates, making it easier for investors to find profits. At a higher level, Vampire Attack brings competition, driving innovation and growth of the Defi space.

The downside of a Vampire Attack is that it can include the potential risk of being scammed and exploited. Investors withdraw liquidity from a reputable pre-existing platform, depositing it into a new platform they don't know well. Thus, investors can lose their assets to fraudulent transactions.

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Above, BHO Network has introduced Vampire Attack in crypto. Now you may have the answer to the question What is Vampire Attack? And understand how it works, its advantages and disadvantages. For helpful knowledge of cryptocurrency, don't forget to follow our site daily!