In fact, a vampire attack is a DeFi method that uses one protocol to provide better interest rates than another protocol to steal their customers and investors.
I believe that most of our readers have had a girlfriend or boyfriend at some point in their lives. Most crypto investors are men, so I will use my girlfriend as an example in the follow-up. For example, you just have a new girlfriend, and for some reason, your best friend wants to take the two of you out for dinner. Given that he is your friend, you don’t see any harm. However, when you are eating, you notice that he is sending a signal to your girlfriend, which is basically flirting with her. This is a metaphor that SushiSwap made to Uniswap. They contacted Uniswap’s liquidity providers, which will be discussed more in the rest of the article.
What is the notorious vampire attack ?
Essentially, these are pools of funds that allow traders to trade. Traders only need to pay a very small fee to the investors who provide the initial capital so that they can trade. So it creates a win-win situation where investors get rewards, and traders actually don’t have to find other people to trade. Simply put, a vampire attack is a DeFi protocol that uses better interest rates to attract investors from another platform. The most famous vampire attack now takes place on SushiSwap, and they can provide one of the best liquidity provider interest rates to any investor on their platform. Doing so means that many people withdraw their liquidity or funds from Uniswap and then put them in SushiSwap.
The vampire attack attempts to obtain three things from another popular protocol. Together, they can be called liquidity. They are money, users, and putting these two things together-transaction volume. This is important because it means With costs, this is a return to investors.
So let’s take a look at how SushiSwap does it? Well, let’s enter a little story about SushiSwap. SushiSwap was created by an anonymous person who called himself Chef Nomi.
Chef Nomi created a vampire attack by offering a native token called sushi as a reward for liquidity providers. He just offered better interest rates.
In fact, at the beginning, these interest rates reached 1000 APR within a few hours of their launch, and the value of tokens invested on their platform exceeded $150 million. Now you may be wondering if you can’t get anything out of it, why do you spend so much time and money creating an agreement for traders?
You are right, Chef Nomi is anonymous. He didn’t even gain fame, but part of the agreement gave his developer wallet about 10% of all sushi tokens, so he accumulated a large amount of sushi tokens that should be used to further develop the agreement. When he traded sushi tokens worth 14 million U.S. dollars into ether, everyone was surprised. It looks like a “raise from the bottom”, and basically it is. But at this time, it was actually one of the largest transaction agreements at the time, so everyone was confused, “Is this a “raise draw”? What is he going to do with the money?” This will answer the question.
He created this website anonymously and worked very hard to make it bigger. So he had 14 million U.S. dollars, and when he cashed out, the price of sushi coins plummeted by 73%. In fact, after this, the agreement is still valid. Therefore, people can still trade their tokens and liquidity providers can still get rewards. But he lost a lot of trust, so Chef Nomi gave the ownership of SushiSwap to Sam Bankman-Fried.
Now let’s see what Sam did. He actually increased the rewards for SushiSwap providers and then tried to further develop the agreement. Since he was anonymous, he tried to increase trust. In fact, there are more stories. Although Chef Nomi returned and returned his $14 million to the development fund, this is the content of another article.
Go on, is a vampire attack a good thing? Now you might think that it is a bad thing for SushiSwap to steal all Uniswap customers, but just like someone else steals your girlfriend, there are pros and cons. The advantage is that competition brings better interest rates to traders and liquidity miners. In the case of your girlfriend, if someone says “Hey, you should turn to the dark side” to your girlfriend, hope this will inspire you to become a better boyfriend, and maybe even a better person overall, this Technically beneficial to you and your girlfriend.
Therefore, competition in the decentralized financial space is very beneficial in many ways. However, a bad feature of vampire attacks is that the tokens created by the platform are unpredictable. We don’t know if the people who grow the tokens will decide to pour them into the market, which will greatly reduce the price. In other words, vampire attacks may be malicious. By providing higher returns, investors can withdraw funds from truly beneficial agreements, and then deposit them into high-risk fraudulent agreements.
Now you know what a vampire attack is and how it is carried out. We would like to ask if you were Chef Nomi, would you do the same thing? We hope to hear from you in the comments below.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/vampire-attacks-in-cryptocurrency/
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