@chunkbunuely
A flash loan is a type of uncollateralized loan in decentralized finance (DeFi) that must be borrowed and repaid within a single transaction block. Since no collateral is required, it allows users to borrow large sums of assets with the promise of immediate repayment. Flash loans can be used for various purposes, such as arbitrage (taking advantage of price differences between platforms), collateral swaps, or executing complex strategies like liquidations or yield farming. They can be highly profitable if executed correctly, but they also come with risks, especially due to transaction fees and the complexity of timing and execution. While they are mainly used by experienced DeFi traders, flash loans are a key part of the liquidity and efficiency of DeFi markets.
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