Can an Arbitrageur Lose Money Using a Flash Loan?
Theoretically, a properly executed flash loan arbitrage transaction should not result in a loss because the entire operation is calculated and submitted as an atomic transaction. If the calculated profit is negative (due to high gas fees or a missed opportunity), the transaction will fail or be reverted before execution, meaning the loan is not taken and no loss is incurred.
However, an improperly coded bot could potentially incur a loss if not designed to revert on negative profit.
Glossar
Flash Loan Arbitrage
Exploit ⎊ The core of flash loan arbitrage involves leveraging uncollateralized loans, typically lasting mere seconds, to profit from fleeting price discrepancies across decentralized exchanges (DEXs).
Arbitrageur
Participant ⎊ An arbitrageur is a sophisticated market participant who capitalizes on transient price discrepancies across identical or economically similar assets in different markets.