Flash Loans
Flash loans are a feature designed for developers due to the technical knowledge required to execute one. Flash Loans allow you to borrow any available assets without putting up any collateral as long as the liquidity returns to the protocol within one block transaction.
In decentralized finance (DeFi), flash loans facilitate complex financial transactions. For example, a user might take out a flash loan to execute a trade on a decentralized exchange (DEX) or arbitrage between different DeFi protocols.
Because flash loans are made available for such a short period, they come with a high level of risk. If the borrower cannot repay the loan within the allotted time frame, they may be required to pay a high penalty. Despite this risk, users execute flash loans because they offer a fast and convenient way to access large amounts of capital.
You must build a contract requesting a Flash Loan. The contract will then need to execute the instructed steps and pay back the loan + interest and fees, all within the same transaction.
Last modified 13d ago