All terms
An uncollateralised loan that must be borrowed and repaid in a single transaction.
Because a blockchain transaction either fully succeeds or fully reverts, you can borrow millions with no collateral as long as you repay within the same transaction. If you cannot, the whole thing unwinds as if it never happened.
This enables legitimate arbitrage and refinancing. It also gives attackers enormous temporary capital to manipulate thin markets.
Many DeFi exploits use flash loans to move an oracle price, borrow against the distortion, and exit in one transaction.
That flash loans are a hacking tool. They are a tool, used for arbitrage and refinancing far more often than for attacks. What they change is that an attacker no longer needs capital, so a flawed contract is exploitable by anybody.
Common questions
How can a loan need no collateral?
Are flash loans just an attack tool?
Where this comes up on the site
The guides that actually use this word, rather than a list of everything we have written.
Where to go next
More defi terms
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