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How Can Flash Loans Be Used for Arbitrage in DeFi?

Flash loans provide instant, massive capital to execute large arbitrage trades in DeFi without needing collateral.
Greeks.Live23.11.25

How Can Flash Loans Be Used for Arbitrage in DeFi?

Flash loans allow users to borrow large amounts of cryptocurrency with no upfront collateral, provided the loan is repaid within the same blockchain transaction. Arbitrageurs use flash loans to borrow massive capital, execute a multi-step arbitrage trade across different DeFi protocols, and repay the loan plus a small fee, all in a single atomic transaction.

This allows for capitalizing on large-scale arbitrage opportunities without needing significant personal capital. The entire process fails if the arbitrage is not profitable enough to repay the loan.

How Do Flash Loans Create Unique Arbitrage Opportunities in Decentralized Finance (DeFi)?
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How Does a Flash Loan Potentially Exploit Smart Contract Vulnerabilities?
What Is a “Re-Entrancy Attack” and How Does It Relate to Flash Loans?

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