flash loan

Syllable breakdown

Dictionary meaning

an uncollateralized cryptocurrency loan that is borrowed and fully repaid within a single blockchain transaction; if the repayment condition is not met, the entire transaction reverts as if it never occurred; used for arbitrage, collateral swaps, and — notoriously — as an attack vector in DeFi exploits

Examples

• The attacker used a flash loan of 800 million dollars to manipulate oracle prices and drain the protocol.
• Flash loans enable arbitrageurs to profit from price differences across exchanges with no upfront capital.

Synonyms: atomic loan, single-block loan, uncollateralized DeFi loan