TECHNICAL CONCEPTS
Flash Loan
Definition
Flash loans are uncollateralized loans that must be borrowed and repaid within the same transaction block. They enable complex DeFi strategies like arbitrage, liquidations, and collateral swaps without requiring initial capital.
Example
Example
A trader uses a flash loan to borrow 1000 ETH, arbitrage price differences between exchanges, and repay the loan plus fees - all in one transaction.
Risks to Consider
Risks
- Transaction failure
- High gas costs
- Complex execution
Common Questions
What happens if I can't repay a flash loan?
The entire transaction reverts, meaning you get your original funds back but pay gas fees for the failed transaction.
