Flash Loan
A flash loan is an uncollateralized DeFi loan that must be borrowed and repaid within the same transaction.
Flash loans allow borrowing assets briefly for arbitrage, collateral swaps, liquidations, or other atomic DeFi operations. If the loan plus fees is not repaid by transaction end, the entire transaction reverts.
Flash loans are neutral tools, but they can provide temporary capital for exploits when protocols have weak oracles, thin liquidity assumptions, or unsafe accounting. Robust price oracles, limits, and circuit breakers reduce attack surfaces.
Related terms
2 linkedExplore connected entries beyond the alphabetical index.
Decentralized Exchange
→A decentralized exchange (DEX) lets users trade digital assets from their wallets through smart contracts or peer-to-peer settlement.
DeFi
→DeFi uses smart contracts to provide permissionless financial services such as trading, lending, borrowing, and asset issuance.
All terms and definitions may update as the Cryptionary improves.
