So what are flash loans all about? And how can they be used to borrow millions of dollars worth of crypto with no collateral? You’ll find answers to these questions in this video.
A flash loan is a feature that allows you to borrow any available amount of assets from a designated smart contract pool with no collateral. Flash loans are useful building blocks in DeFi as they can be used for things like arbitrage, swapping collateral and self-liquidation.
Flash loans, although initially introduced by the Marble protocol, were popularised by Aave and dYdX.
So, what’s the catch?
A flash loan has to be borrowed and repaid within the same blockchain transaction.