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How We Prepared for the Alameda Research Attackby@pavlokarapinka
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How We Prepared for the Alameda Research Attack

by Pavlo KarapinkaJanuary 3rd, 2023
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Vires Finance is a Waves token with liquidity over 1,3 billion dollars. It is a decentralized landing and borrowing protocol on the Waves blockchain. Vires Finance was attacked by Alameda Research, a research company. The team at Vires has written a guide on creating a crypto community and shielding your project.
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A guide on creating a crypto community and shielding your project from the attacker.

Friday spring evening...

WAVES token has shown extreme growth 

Nothing foresaw trouble ...

Apart from.. 10 messages from Vires Finance ambassadors that were a little bit embarrassed with the FUD campaign that is about to start 

"Come on, it's Friday evening, maybe, it is some kind of illusion after a hard working week," - we thought. 

Saturday evening.

Nope, that wasn't either illusion or a mistake.

That was our reality.

Alameda Research decided to hide its manipulation by launching the FUD campaign. 

If you don't understand what exactly happened, here's a little footnote: because of Alameda's research market maker activities USDT was decoupled from the 1 dollar, Waves dropped in price, and so on Vires.finance a user couldn't withdraw the assets. 

Even though one never prepared for such things, we were prepared (without preparing). At the point we had the ambassador board - this is another reason we would always say that you've got to make the ambassador board - also, as a marketing team, we were on the same page with the community and deeply felt the product. Besides, we had this powerful connection with the team of Vires.finance. So we had a background that helped to overcome this situation and not to be trapped in the circumstances as Terra appeared to be. 

Who knows what would happen if Terra worked with Solus.b. 

At the time any marketing activities weren't relevant. As a marketing team that felt responsible for the user we brought, we dedicated our weekends to communication with bloggers and the community to explain what happened and to manage the expectations. 

Today it is easy to see that people trust Vires.finance again, even though we'll need some time to restore it fully. Not one person lost money during this storm. Well, except for Alameda's research. But anyway, CZ contributed to the death of Alameda “a little bit” more than us :)

So, how did we prepare for the Alameda Research attack? Let us start from the beginning

Vires.finance - AAVE/Compound style decentralized landing and borrowing protocol on the Waves Blockchain with liquidity over 1.3 billion dollars. Unlike conservative landing/borrowing protocols, Vires offers a uniquely high % of APY.

When you start working with companies that require building brand awareness from scratch, you don't anticipate attacks from market competitors. No, you move differently. You think about the audience and note that it consists of: 

  • APY hackers
  • Crypto newbies
  • High-net-worth individuals
  • Market makers

Then, you think, excellent, we defined that. You are moving on to another point, the challenges. Together with the client, you list the goals:

  • Build brand awareness
  • Boost liquidity from 400k to 100KK
  • Overcome banner blindness 
  • Persuade the NON-crypto audience to enter the crypto with Vires Finance

But… even though you don't expect any attack, and you are perfectly unaware of such a turn of events, at some point, you might face it. That's what happened to us — we received another challenge, more significant than those we already have - to win the battle with Alameda Research. How did that end? 

Okay, let's consider how everything happened in order. Keep reading :)

How we built a community for a dark horse

How to win the trust of the crypto community if you have a few hundred users yet?

Every founder or contributor that just stepped into this path inevitably faces the question. At the beginning of this collaboration, we weren't an exception. We started working with Vires.finance when the liquidity they had was only 400 mln, so the fight for trust was waiting to happen. 

They didn't have any user attraction tool before we started the collaboration. All the users were dedicated fans of the Waves ecosystem that somehow learned about the launch of this project.

So, it is evident: before we started our collaboration Vires.finance was a bit of a dark horse. 

But everything changed after we began to work together.

How to turn a dark horse into a perspective crypto project that everyone should hurry up joining 

Double value.
 After researching the marketing activities of primary and secondary competitors, we learned that at one time was merely a hypothesis, but now it is the truth we don't dare to doubt. Here it is: marketing activities can be effective if only they provide a double value. What is this double value? 

Today is not enough just to launch a great product. Only a small percentage of crypto-researchers could understand the worth of your product. So the value should be in the content you're making with the ads, as, naturally, in the product itself. Double. 

The value of a product was doubtless - Vires.finance offered 80% APY on stables. The first part of the value equation was already there. The second part - making marketing activities full of value to the crypto community - was ahead of us.

And...we made it work. 

Instead of writing clickbait-style posts and promising extremely high profits in a few minutes, we go another way and educate the crypto community with guides, insights, tutorials, etc.

Here are examples of such content :


There needs to be more than one marketing tool. 
Make peace with the fact that one marketing tool will not bring you considerable results. The ICO era has gone - you can't work with one blogger now and expect to get a billion of liquidity. 

Considering that we started with Vires.finance from scratch, it was important to test different variables - certain types of content, audiences, triggers, activators, etc. But once we had this data, we decided to build a comprehensive system. 

Hypotheses. We shaped hypotheses that later became a basis for all of our marketing activities. What are these hypotheses? 

Apy hacking - in a series of publications, we positioned Vires.finance as one of the components for a scheme that can bring 3000%+ APY. This contained a real value, and the scheme became extremely popular, going from one user to another, so vires.finance received enough organic traffic.

Example:

The comparison of landing platforms - here, we had a very simple rule: is the post we wrote clear enough, so non-crypto users want to repost it? We should emphasize the advantages of Vires.finance, but we often provide useful, profound, and meaningful information that quickly scatters over the crypto community. 

Translating the dynamics of income in Vires.finance - in a market where the level of untrust is quite high, nothing can assure better than your favourite blogger, highlighting how has changed the amount of investing in a certain product.

Situational and info-caused content - the crypto space is too dynamic to plan ten hypotheses and simply follow this plan without changing anything. Our task always was to react immediately to any event - whether it was about the competitors' drop of apy or some vital news from the Vires.finance itself. We had our fabulous tool called "the ambassador board" for such things.

Finally, the last hypothesis brought by Alameda research, but you have to read further to learn what it was:)

How to optimize the budget for KOLS

 Let us say it one more time (do you count it, by the way?) - build long-term relationships KOLs. 

Influencers are usually ready to make discounts for publications if you ask for the whole pack of them. Typical market relationship at its best: wholesale generates discount. 

Thus you'll get way more than just a lower price: you'll have an influencer immersed in your product and, therefore, better integration as an outcome. 

Yeah, the number of new users will decrease with each publication on the same channel, but the value will increase constantly. Why? Because it is your product that is growing needs now. 

To build trust, you have to work with trusted people. Of course, we want to find the most effective, ROI-driven ways of collaboration. Still, it is impossible to ignore influencers with big audiences and remember the basic rules of the crypto market. 

Moreover, long-term relationships with influencers will open up the possibility of reacting to potential Alameda research. 

Put together PPC marketing with YouTube, and you'll be shocked to see how down CPM will be. Anyone asking a YouTube influencer the price for a video probably has been thinking about becoming a YouTube influencer. Why? Because the prices are incredibly high. It is critical for a new product that does not have an army of followers to make such integrations. Anyone who'll learn about your product could use YouTube to find a step-by-step guide on that product.

We made such integrations, quite pricey ones, and launched google traffic. We attracted a new audience to that YouTube influencer's channel. Due to that, he has made the price even cheaper for us. So CPM was like Barbra Streisand. 

Typical YouTube video CPM - 200$+

Typical Google PPC CPM - 1,2$

YouTube video + Google PPC - Magic 

Make your bloggers repost each other. It might sound absurd. But it is elementary: if one of the influencers doesn't have a YouTube channel and can't elaborate to the audience on how to use Vires.finance, ask him to repost videos of the other bloggers. This will also help to decrease CPM. 

If you couldn't bring mass adoption to the whole crypto, bring mass adoption to your project. 

While launching your marketing activities, beware of the next thing: your target audience is limited because in crypto right now, 35 million people are probably already using big platforms anyway. However, the earth's population is even bigger;) So, the trick for any project that wants to be more than another crypto startup is to attract an audience that is not yet the crypto audience and offer them transparent, detailed, and clear ways of entering the sphere. 

This is the way to get a critically loyal audience. Since these people will immerse into the crypto thanks to your project, you have the space and possibilities to achieve incredible numbers at LTV, ROI, and other metrics. 

What did we manage to achieve?

The answer is quite impressive. 

We managed to reach 1,5KK of TVL and attract 10K users. This boosted brand recognition which was an initial aim, and finally, with our primary tool - the ambassador board we attracted ~20 KOLs. 

"How to evaluate the growth of brand recognition" - you will ask

"If Alameda Research pays attention to your project, you could be sure that the goal is achieved" - we will answer

Consequences

In crypto, we will never know who will be next. The next gem or the next bankruptcy. No matter who. We are living in the world of the hi-tech wild west, where the rules of existence are still in progress. And only the strongest projects with the strongest network, which will become “at the top of the food chain” will stay alive and prosper. 

In the wild west, there is no place for generally accepted norms approved by all, but there is a place for the authority of the leader of the pack. One tweet could change the way it goes.

In the case of Vires Finance that leaders in the faces of KOLs become a decisive factor in the victory of the project. So once you are not about to be crushed by other inhabitants of the wild west - be sure that dozens of loyal speaking heads that would support your project no matter what. 

Insight

Hopefully, all makers' attacks will omit you. However, always be prepared for such a thing so that you can optimize the situation to your benefit. 

The old saying goes: "It is better to walk our path of Vires.finance than the one Terra went"


Also published here.