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How Does a Flash Loan Differ from a Traditional Smart Contract Loan?

Flash loans are uncollateralized and must be repaid in the same transaction; if not, the transaction is reverted, ensuring zero lender risk.
Greeks.Live06.11.25

How Does a Flash Loan Differ from a Traditional Smart Contract Loan?

A flash loan is an uncollateralized loan that must be borrowed and repaid within the exact same blockchain transaction. If the repayment fails within that transaction, the entire transaction is automatically reverted, ensuring the lender takes zero risk.

Traditional smart contract loans are overcollateralized and repaid over time, across multiple transactions. Flash loans are primarily used for arbitrage or collateral swapping.

How Do Flash Loan Attacks Exploit Smart Contract Vulnerabilities?
How Does a Collateralized Debt Position (CDP) Function in Decentralized Finance?
What Is a “Flash Loan” and How Is It Enabled by Smart Contracts?
What Is the Core Security Mechanism That Makes Flash Loans Possible?

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