Enso Finance Plans Vampire Attack on Six Major Index Projects

Enso Finance is planning a bold move to pick up customers — a vampire attack on leading index platforms.

By: Owen Fernau Loading...

Enso Finance Plans Vampire Attack on Six Major Index Projects

Enso Finance, a social trading platform, is planning a vampire attack on six major index products in the crypto space.

Enso’s intended victims are Index Coop, Tokensets, PieDAO, dHEDGE, Powerpool, and Indexed. The attack will begin on Dec. 9, according to a teaser video released on the protocol’s Twitter.

There’s $1.2B worth of index tokens which users could potentially migrate, Connor Howe, Enso’s co-founder, told The Defiant. That’s almost reaching the $1.51B SushiSwap’s automated market maker (AMM) attracted during its Sep. 2020 vampire attack, which would turn out to be perhaps DeFi’s most iconic moment.

Indeed, Howe said he and his co-founder were inspired by the SushiSwap attack, saying it’s a great go-to market strategy which will allow Enso to demonstrate its technology, reward early adopters, and even show off some visual flair.

The attack boils down to Enso offering its ENSO tokens to users who deposit the index tokens of the six protocols as rewards for users migrating. ENSO will be used for staking, governance, protocol fees, and aspects of gamification.

A diagram of the attack.

More specifically, after users stake the index tokens for three weeks, Enso will burn them. The protocol will then withdraw the index’s underlying assets and put them into an essentially identical product, while also adding ENSO rewards on top as well as NFTs.

For example, Enso would burn DeFi Pulse Index (DPI), produced by Index Coop, and wrap the 18 tokens which make up the index into something called EnsoDPI. So a user enters the attack with DPI and exits with EnsoDPI, ENSO tokens, and also NFTs.

Immersive Arcade

The Enso team has worked to make the whole migration experience fun. “We’ve gamified the whole experience and have spent six months on an immersive arcade with NFTs integrated,” Howe said. Indeed the teaser video features shots of six arcade games, presumably for each index protocol.

Howe says users will be able to participate in a tournament after migrating their index tokens. The tournament will showcase perhaps Enso’s core differentiator — the protocol’s ability to grant users access to any ERC-20 token to combine with any other like-kind tokens and wrap the lot into another tradable ERC-20 token.

This is taking index products to the extreme, with no whitelists, and no restrictions on which assets can be included. So yield-bearing tokens like cDAI, which represents a yield-bearing deposit in Compound Finance, or tokens which represent liquidity provider (LP) positions can be included in strategies.

LP tokens’ inclusion in strategies may enable projects to earn extra yield on their protocol-owned-liquidity, the key classifier of DeFi 2.0.

Enso’s approach contrasts with the more conservative indexes the protocol plans to attack.

Index Coop’s DPI, for example, comes with a host of restrictions such as disallowing wrapped tokens, tokenized derivatives, synthetic assets, tokens that are tied to physical assets, and tokens that represent claims on other tokens.

The Enso team even has a manifesto which emphasizes the projects’ values. “Do not build walled gardens, produce the soil for entirely new ecosystems,” reads one mandate.“Do not limit integrations. Promote them,” says another.

“I see the world in a similar way to a child riding a bicycle. They learn by falling off,” said Howe. “A lot of these platforms isolate you and only allow you to do particular actions.”

Peter Le’Monade, growth lead at Index Coop, doesn’t think Enso is unearthing new ground. “We believe social trading and custom indices are not necessarily new and other non-Set platforms like Enzyme and dHEDGE already offer various similar products,” Le’Monade said of Enso.

Indeed, Set Protocol does offer users the ability to freely create “Sets,” or strategies, though there are some requirements, like having liquidity against WETH on Uniswap or Sushiswap, outlined in their docs.

Enso’s Howe is undeterred by previous index protocols’ efforts and is excited at the prospect of meta-strategies, whereby users will be able to wrap other users ERC-20 bundled strategies into strategies of their own.

There’s a social aspect to Enso, too — the protocol’s website teases trending users and leaderboards. In addition to being able to use other people’s strategies as parts of their own, people will be able to invest in other users’ strategies.

Howe sees this as a potential advantage for skilled DeFi users short on capital.

“We see some guys who are quite young in the industry, maybe 17, 18 and they’re very good at finding alpha,” the Enso co-founder said. “But they might only have $1,000, $2,000, to their name to then deploy into a farm.”