# How Does a Flash Loan Facilitate Triangular Arbitrage without Upfront Capital? ⎊ Path

**Published:** 2025-12-05
**Author:** Greeks.live
**Categories:** Path

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## How Does a Flash Loan Facilitate Triangular Arbitrage without Upfront Capital?

A flash loan allows a user to borrow an uncollateralized sum of capital, provided the loan is repaid within the same blockchain transaction block. An arbitrageur uses the borrowed capital to execute the three-step trade sequence (A to B, B to C, C back to A).

If the arbitrage is profitable, the profit is used to repay the loan plus a small fee, and the remainder is kept as profit. If the repayment fails, the entire transaction is reverted, protecting the lender.

- [How Is Triangular Arbitrage Different from Futures-Spot Arbitrage?](https://learn.greeks.live/path/how-is-triangular-arbitrage-different-from-futures-spot-arbitrage/)

- [How Does a Flash Loan Potentially Facilitate a Governance Attack?](https://learn.greeks.live/path/how-does-a-flash-loan-potentially-facilitate-a-governance-attack/)

- [How Does a Flash Loan Attack Specifically Target a Single-Point Settlement Price?](https://learn.greeks.live/path/how-does-a-flash-loan-attack-specifically-target-a-single-point-settlement-price/)

- [What Is the Difference between Triangular Arbitrage and Statistical Arbitrage?](https://learn.greeks.live/path/what-is-the-difference-between-triangular-arbitrage-and-statistical-arbitrage/)

- [What Is a Flash Loan and How Is It Often Used in MEV Strategies?](https://learn.greeks.live/path/what-is-a-flash-loan-and-how-is-it-often-used-in-mev-strategies/)

- [What Is a ‘Flash Loan Attack’ and How Does It Exploit DEX Protocols?](https://learn.greeks.live/path/what-is-a-flash-loan-attack-and-how-does-it-exploit-dex-protocols/)

- [How Does the Availability of Lending/borrowing for the Spot Asset Affect the Profitability of the Carry Trade?](https://learn.greeks.live/path/how-does-the-availability-of-lending-borrowing-for-the-spot-asset-affect-the-profitability-of-the-carry-trade/)

- [How Do Transaction Execution Order and Block Inclusion Relate to Flash Loan Success?](https://learn.greeks.live/path/how-do-transaction-execution-order-and-block-inclusion-relate-to-flash-loan-success/)

## Glossar

### [Flash Loan](https://learn.greeks.live/area/flash-loan/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Mechanism ⎊ A flash loan is a unique, uncollateralized loan mechanism in decentralized finance that allows users to borrow assets for a very short duration, typically within a single blockchain transaction.

### [Triangular Arbitrage](https://learn.greeks.live/area/triangular-arbitrage/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Arbitrage ⎊ Triangular arbitrage, within the context of cryptocurrency derivatives and financial markets, exploits temporary price discrepancies across three distinct markets or exchanges for the same underlying asset or related instruments.

## Discover More

### [How Does the Lack of Know Your Customer (KYC) Requirements on a DEX Facilitate Scams?](https://learn.greeks.live/path/how-does-the-lack-of-know-your-customer-kyc-requirements-on-a-dex-facilitate-scams/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does the Lack of Know Your Customer (KYC) Requirements on a DEX Facilitate Scams?](https://learn.greeks.live/wp-content/uploads/2025/10/Decentralized-Autonomous-Organization-Governance-Mechanism-Propagating-Kinetic-Volatility-Transfer-via-Exotic-Options-Structures.webp)

Lack of KYC allows scammers to operate anonymously on DEXs, making it nearly impossible for law enforcement to trace and prosecute them.

### [What Is a "Flash Loan" and How Does It Leverage DeFi Composability?](https://learn.greeks.live/path/what-is-a-flash-loan-and-how-does-it-leverage-defi-composability/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is a "Flash Loan" and How Does It Leverage DeFi Composability?](https://learn.greeks.live/wp-content/uploads/2025/10/Focus-Parabolic-Reflector-Feedhorn-Assembly-Illustrating-Orthogonal-Dipole-Orientation-Near-Parabolic-Aperture.webp)

It is an uncollateralized loan borrowed and repaid in one atomic transaction, leveraging composability for massive, risk-free arbitrage or exploits.

### [What Is the Risk of a "Flash Loan Attack" on a DEX Liquidity Pool?](https://learn.greeks.live/path/what-is-the-risk-of-a-flash-loan-attack-on-a-dex-liquidity-pool/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Risk of a "Flash Loan Attack" on a DEX Liquidity Pool?](https://learn.greeks.live/wp-content/uploads/2025/10/Quantum-State-Collapse-Mechanisms-Governing-Digital-Asset-Volatility-Hedging-Instruments.webp)

A flash loan attack uses a massive, uncollateralized loan within one transaction to manipulate the pool's price and drain assets via arbitrage.

### [How Does Increased Margin Requirements Due to Volatility Affect the Return on Arbitrage Capital?](https://learn.greeks.live/path/how-does-increased-margin-requirements-due-to-volatility-affect-the-return-on-arbitrage-capital/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does Increased Margin Requirements Due to Volatility Affect the Return on Arbitrage Capital?](https://learn.greeks.live/wp-content/uploads/2025/10/Symmetrical-Dynamic-Deployment-of-Decentralized-Finance-Protocol-Gateway-Aperture-Mechanism.webp)

Higher margin ties up more capital, reducing the Return on Capital (RoC) for the arbitrage trade.

### [What Is the Technical Difference between a Flash Loan and a Traditional Collateralized Loan?](https://learn.greeks.live/path/what-is-the-technical-difference-between-a-flash-loan-and-a-traditional-collateralized-loan/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Technical Difference between a Flash Loan and a Traditional Collateralized Loan?](https://learn.greeks.live/wp-content/uploads/2025/10/Layered-Actuator-Mechanism-Representing-Decentralized-Exchange-Liquidity-Pool-Staking-Protocol-Interface.webp)

Flash loans are uncollateralized and must be repaid in one transaction; traditional loans require collateral and are long-term.

### [What Is the Main Technical Challenge in Executing Triangular Arbitrage?](https://learn.greeks.live/path/what-is-the-main-technical-challenge-in-executing-triangular-arbitrage/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Main Technical Challenge in Executing Triangular Arbitrage?](https://learn.greeks.live/wp-content/uploads/2025/10/Precision-Instrument-Modeling-for-Decentralized-Finance-Volatility-Surface-Calibration-Analysis.webp)

The core challenge is the ultra-fast, simultaneous execution of three linked orders before the price imbalance corrects.

### [How Does the 'Longest Chain Rule' in Proof-of-Work Facilitate the Selfish Mining Attack?](https://learn.greeks.live/path/how-does-the-longest-chain-rule-in-proof-of-work-facilitate-the-selfish-mining-attack/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does the 'Longest Chain Rule' in Proof-of-Work Facilitate the Selfish Mining Attack?](https://learn.greeks.live/wp-content/uploads/2025/10/Futuristic-Quantum-FinTech-Vehicle-Representing-Decentralized-Autonomous-Organization-Governance-Vector-Analysis.webp)

The rule forces the network to switch to the selfish miner's longer, secretly-built chain, invalidating honest blocks.

### [How Does the "Same Transaction" Constraint of a Flash Loan Limit the Attack Vector?](https://learn.greeks.live/path/how-does-the-same-transaction-constraint-of-a-flash-loan-limit-the-attack-vector/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does the "Same Transaction" Constraint of a Flash Loan Limit the Attack Vector?](https://learn.greeks.live/wp-content/uploads/2025/10/Macro-Examination-of-High-Frequency-Trading-Needle-Contact-with-Teal-Liquidity-Pool-Barrier.webp)

The atomic nature of the transaction forces the attacker to repay the loan instantly; otherwise, the entire exploit is reversed.

### [How Does the Concept of 'Hash Time-Locked Contracts' (HTLCs) Facilitate Atomic Swaps?](https://learn.greeks.live/path/how-does-the-concept-of-hash-time-locked-contracts-htlcs-facilitate-atomic-swaps/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does the Concept of 'Hash Time-Locked Contracts' (HTLCs) Facilitate Atomic Swaps?](https://learn.greeks.live/wp-content/uploads/2025/10/Precision-Actuation-Dynamics-of-Near-Zero-Latency-Hardware-Wallet-Seed-Phrase-Retrieval-Mechanism.webp)

HTLCs use a cryptographic hashlock and timelock to force simultaneous fund exchange, ensuring DVP by linking the two transactions.

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