What is a Vampire Attack?
How to attract a sufficient number of users quickly? All blockchain projects ask this question. Some of them choose a specific tactic - vampire attack. Today we will find out how true Web3 vampires behave!
Vampire attack is a method of attracting users of more popular competing projects. Such a strategy suggests introducing a new product and choosing it for constant use, receiving more favorable conditions and rewards.
The result of the vampire attack is obvious: competitors lose part of their audience and capital, and vampire projects in the shortest possible time get many active investors who are looking for more profitable offers.
Why do vampires attack?
At the start, each blockchain project is interested in achieving the key parameters, that are typical for segment leaders:
• Large number of users;
• High liquidity;
• Big trading volume.
In conditions of severe competition, newcomers will need a lot of time to improve their performance. Vampire attack can be an alternative way to get what you want faster.
Principles of vampire attacks
Vampire attacks are among the strategies used in the decentralized finance sector. The reason for this is the main feature of DeFi apps - open source.
Due to its free access, each user can independently check the functionality and security of the project. However, for vampires, open source is the direct way to “suck” users and their funds. How does this happen?
1. They choose a popular profitable project.
2. Create an almost identical application with minimal differences in code or business model.
3. Particular attention is paid to incentive mechanisms that will guarantee bigger profits for the users of the chosen project.
Good or bad?
At first glance, a vampire attack is a typical phenomenon of the dark side. But it is important to understand that if there are no dubious schemes, a vampire project can have a favorable effect on the victim. Most probably that the attacked application will improve security measures and at the same time develop new interesting offers for users.
The situation is different if intruders are involved in the development of copy projects. Their goals can be different: to raise funds in a fraudulent protocol or to bring down the price of certain tokens. But in this case the actions of Web3-vampires are criminal.
How to protect yourself from vampires in Web3
Is fair competition between blockchain projects possible? Can vampire attacks be prevented? Yes, but for this, big players should follow a few recommendations:
• Implement a voting mechanism among users that will help to choose the right protocol;
• Limit the withdrawal of liquidity provider (LP) tokens to prevent mass outflow of users;
• Approve a blocking period for new users, during which they will not be able to withdraw capital.
Vampire attacks are an integral element of DeFi, and there is currently no 100% protection against it. That is why segment leaders need to stay on the alert.
