Flash Loan Mechanics: Instant, Risky, and Often Misunderstood

How Flash Loans Function in Crypto Markets

Flash loans are a type of uncollateralized loan available through decentralized finance (DeFi) platforms. Unlike traditional loans that require credit checks or collateral, flash loans are executed and repaid in the same blockchain transaction. If the borrower fails to repay the loan within that transaction, the whole transaction reverts, as if it never happened. This feature makes them attractive to arbitrage t...