Flash Loan
Also known as: Atomic Loan
A trustless loan that must be borrowed and repaid within the same blockchain transaction.
Flash Loans are instant, uncollateralized loans unique to DeFi, where borrowing and repayment happen within a single atomic transaction. If not repaid, the transaction reverts. Flash loans enable arbitrage, collateral swaps, leverage, and complex DeFi strategies without upfront capital. However, they’ve also been used in manipulation attacks and exploitations. Protocols like Aave and dYdX offer flash loan facilities, and security audits are critical to mitigate risks associated with their misuse.