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What Are the Primary Risks of Using Flash Loans for Arbitrage?

The main risks are losing funds to buggy smart contracts or the arbitrage failing mid-trade, costing you gas fees for nothing.
Greeks.Live23.11.25

What Are the Primary Risks of Using Flash Loans for Arbitrage?

The primary risks of using flash loans for arbitrage are smart contract vulnerabilities and execution failure. If the smart contract used for the arbitrage has a bug or is exploited, the borrowed funds could be lost.

Execution failure occurs if the arbitrage opportunity disappears mid-transaction due to market volatility or network congestion. This causes the transaction to revert, but the user may still be liable for gas fees, resulting in a net loss without any trade being executed.

How Can Flash Loans Be Used for Arbitrage in DeFi?
How Do Flash Loans Create Unique Arbitrage Opportunities in Decentralized Finance (DeFi)?
What Is a Reentrancy Attack in Smart Contracts?
What Is the Primary Difference between a Flash Loan and a Traditional Margin Loan?

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