Enso Finance Plans “Vampire Attack” Targeting DeFi Index Protocols

Key Takeaways

  • Enso Finance, a new DeFi index and social trading platform, has announced its mainnet launch due on Dec. 9.
  • The launch will involve bootstrapping liquidity through a simultaneous vampire attack on six competing protocols.
  • Users migrating liquidity to the platform will be rewarded with NFTs and Enso’s native tokens.

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Enso Finance, a new index and social strategy creation platform, has announced its plans to bootstrap liquidity for its platform by launching a simultaneous “vampire attack” on six DeFi index protocols.

Enso Finance to Bootstrap Liquidity via “Vampire Attack”

Enso Finance is about to target six of DeFi’s leading index protocols.

In a Wednesday press release, the new DeFi index and social trading platform announced its mainnet launch due to launch on Dec. 9.

Enso plans to bootstrap liquidity through a controversial strategy dubbed a vampire attack, which involves enticing users to migrate liquidity from competing protocols by offering higher rewards or incentives for use.

Specifically, Enso plans to take aim at six DeFi index protocols: Index Coop, TokenSets, dHedge, PowerPool, PieDAO, and Indexed Finance. Each of the six protocols offers crypto indices or products that aggregate and track the performance of a basket of assets. They collectively hold about $900 million in total value locked. 

Starting Dec. 9, users will be able to transfer their index tokens from the six protocols over to Enso’s platform to begin earning various rewards. Enso will compensate users’ gas fee expenses for the migration and further reward them with NFTs containing “hidden gems” and Enso’s native tokens.

Commenting on the decision to bootstrap the project through a vampire attack, Enso co-founder Connor Howe said:

“Liquidity is the fuel that powers DeFi and it is the essence of Enso’s platform. We want to show the community just how innovative we are, and there’s no better way of doing so than incentivizing existing users to migrate. This is the first time anyone’s attempting to attack six protocols at once, so we’re very anxious to get started!”

The vampire attack liquidity bootstrapping strategy was pioneered by the decentralized exchange Sushi, when last year it successfully forked the code and drained roughly $1.5 billion worth of liquidity from the most prominent decentralized exchange in the space, Uniswap.

Now, Enso is planning to pull a similar move, only to six protocols simultaneously instead of one. In order to entice users to actually migrate their liquidity from its competitors, Enso would likely have to offer significantly higher rewards than these projects already do.

According to the press release, besides merely migrating liquidity from other protocols, users will also be able to create their own yield farming and investing strategies and supply fresh capital to the protocol.

Disclosure: At the time of writing, the author of this feature owned ETH and several other cryptocurrencies.

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Enso mounting ‘vampire attack’ on six crypto index projects

Metaverse-based social trading platform Enso Finance has announced its plans to launch its platform by performing a “vampire attack” on six major crypto index projects on Dec. 9.

A vampire attack is when a platform entices users and liquidity from a competing platform by offering higher incentives for use. In September 2020, SushiSwap performed a vampire attack that led to about $1.5 billion moving from Uniswap to SushiSwap.

The Enso team tweeted on Dec. 7 that the attack would focus on Index Coop, Tokensets, PieDAO, dHEDGE, Powerpool, and Indexed. Each of these protocols offer crypto index products which aggregate the performance of a basket of assets in a particular niche, such as DeFi coins or NFT game tokens. Users will have to deposit index tokens from those indexes onto Enso’s platform to earn an array of incentives. It aims to attract up to $1.05 billion in total value locked (TVL).

Enso is a social trading platform that will allow individuals, communities, or decentralized autonomous organizations (DAO) to create trading strategies or yield farm strategies. They will then be able to share their keys to a successful strategy on the platform.

Enso will reimburse gas fees, give away ENSO governance tokens, and airdrop Enso nonfungible tokens (NFT) to early adopters.

After users keep their migrated tokens staked on Enso for 3 weeks, Enso will burn the original tokens and issue wrapped versions of that index’s underlying assets.

Related: Nasdaq Stockholm lists Bitcoin and Ether exchange-traded notes

Enso co-founder Connor Howe was optimistic about the stunt’s potential.

“Liquidity is the fuel that powers DeFi and it is the essence of Enso’s platform. We want to show the community just how innovative we are, and there’s no better way of doing so than incentivizing existing users to migrate.”