Flash Loan
A flash loan is an uncollateralized loan that must be borrowed and repaid within a single blockchain transaction. If not repaid, the entire transaction reverts as if it never happened.
Understanding the Concept
Flash loans are unique to DeFi—they can't exist in traditional finance. Borrow millions with no collateral, use it however you want, repay within the same transaction. If you can't repay, it's like it never happened. Legitimate uses include arbitrage (exploit price differences across DEXs), collateral swaps (refinance positions), and self-liquidation. Malicious uses include price oracle manipulation and governance attacks. Flash loans have enabled billions in both legitimate profits and exploits. Understanding them helps you evaluate DeFi protocol risks.
Real-World Example
You spot ETH trading at $2,000 on Uniswap and $2,050 on Sushiswap. You flash loan $10M, buy 5,000 ETH on Uniswap, sell on Sushiswap for $10.25M, repay the loan plus fees. Profit: ~$200K in one transaction.
How Strykr Helps
Strykr tracks Flash Loan developments across the crypto ecosystem. Our AI provides real-time insights and alerts to help you navigate the market with confidence.
Try Strykr Free