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+--- Thread: What are flash loans in crypto (/showthread.php?tid=7873)
What are flash loans in crypto - smithtaylor - 08-12-2024
Instant Loan Execution: Flash loans are a type of loan in the crypto world that are executed instantly within a single blockchain transaction, without requiring collateral.
No Collateral Needed: Unlike traditional loans, flash loans do not require the borrower to provide any collateral, making them unique in the financial space.
Atomic Nature: The entire process of borrowing and repaying the flash loan happens in a single transaction. If the loan isn’t repaid within that transaction, the entire process is reversed, ensuring the lender faces no risk.
Arbitrage Opportunities: Flash loans are often used for arbitrage, allowing traders to take advantage of price differences across different exchanges without needing upfront capital.
Smart Contracts: These loans rely heavily on smart contracts, which automatically enforce the terms of the loan, ensuring that the borrower must meet all conditions within the same transaction.
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