What Is a “Vampire Attack” in the Context of DEX Liquidity and Spread?

A vampire attack is a malicious strategy where a new DEX attempts to steal liquidity from an existing DEX by offering significantly higher incentives, typically in the form of token rewards for liquidity providers (LPs). LPs are incentivized to migrate their assets to the new platform.

This siphons liquidity from the original DEX, widening its bid-offer spread and potentially rendering it non-competitive.