What is a vampire attack in crypto?

A vampire attack in the context of cryptocurrency refers to a situation where a new project, often a fork of an existing one, offers better incentives or rewards to users than the original. This is typically done to attract the user base and liquidity from the original project to the new one.

Key characteristics of a vampire attack include:

- The new project aims to outdo another project with very similar features.

- The new project looks to steal competitors’ resources and customers who provide critical liquidity

- The attack often involves a decentralized finance (DeFi) protocol or decentralized application offering better rates for the same service than a close competitor.

- These attacks often involve mechanisms like liquidity mining, staking rewards, or lower transaction fees to entice users to switch from the original project to the new one.

The term "vampire attack" comes from the idea that the new project "sucks the life" out of the original project. It's important to note that these attacks aren't necessarily scams or inherently malicious. In many cases, they are an aggressive and highly competitive growth strategy common in crypto.

An example of a vampire attack is SushiSwap's attack on Uniswap. SushiSwap is a Uniswap fork that attacked Uniswap when it launched the SushiSwap (SUSHI) token.
How does a vampire attack work?

Certain projects are more likely to experience vampire attacks, such as those that rely on users and liquidity. These projects include decentralized exchanges (DEXs), automated market makers, non-fungible token marketplaces and yield farms.


Attacks can target projects with high liquidity because the pool of capital is attractive to the new project. This is called liquidity pool exploitation. They can also target established communities that the new project can infiltrate and use for promotion. Projects with high fees and a lack of innovation are also attractive targets because the new project can undercut the old and offer new features and incentives.


A new project conducting a vampire attack will ensure it offers high incentives, like airdrops and aggressive marketing to the existing project's community. It will incentivize users to move their liquidity from the existing project and quickly try to increase their own liquidity pools and volume. Afterward, it will try to retain its new users.

For example, if the attacker is a liquidity provider, it will offer highly competitive yield farming. If the attacker and its target is a staking service, then it will offer better staking rewards.
How to protect against crypto vampire attacks


The simplest way for crypto projects to protect against less aggressive vampire attacks is to be competitive with healthy incentives, reward loyal users and innovate to offer the best features.


There are more specific measures a project can employ to protect users and liquidity. This includes lock-in periods that prevent users from easily withdrawing liquidity after receiving incentives, thus ensuring their commitment to the platform. Similarly, liquidity token withdrawal restrictions limit how much users can withdraw within a specified timeframe, discouraging mass exits.


Token vesting schedules distribute rewards gradually, safeguarding platform liquidity. Dynamic rewards further incentivize user loyalty and engagement. Incorporating decentralized autonomous organizations or granting voting rights fosters user involvement in governance, enhancing loyalty.


Additionally, security audits, community building and reputation management strategies bolster a project's appeal and credibility, making it more resistant to competition. Collectively, these tactics reinforce user commitment and trust, which are crucial for the sustained success of decentralized platforms.

Crypto users and investors can also protect themselves against vampire attacks by being aware of new project tactics. For example, new DEXs offer very high incentives in return for liquidity.


Moreover, savvy investors and crypto users should always conduct extensive research and due diligence to ensure they don't fall victim to scams