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Explain the Concept of “Flash Loans” in DeFi

Uncollateralized. Borrow and Repay in 1 Transaction. Automatic Reversal. Arbitrage Use 80.
Greeks.Live18.11.25

Explain the Concept of “Flash Loans” in DeFi.

A Flash Loan is a type of uncollateralized loan where the funds are borrowed and repaid within the same blockchain transaction. The loan is executed by a smart contract that guarantees repayment.

If the funds are not repaid by the end of the transaction, the entire transaction is automatically reversed. They are primarily used for arbitrage, collateral swaps, and liquidations.

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