Flash Loan
In DeFi (Decentralized Finance)
Plain English
A loan that must be borrowed and repaid within the same transaction (fractions of a second). If you can’t repay it in that same transaction, the whole thing cancels like it never happened. Used for arbitrage, refinancing debt, or sometimes exploiting vulnerable protocols.
Technical
Uncollateralized loans borrowed and repaid within a single atomic transaction. Enabled by smart contract atomicity - if any step fails, entire transaction reverts including loan. Used for: arbitrage across DEXs, collateral swapping, liquidation execution, exploiting protocol vulnerabilities. Popular on Aave, dYdX. Solana limitations: transaction size constraints make complex flash loan operations challenging.