What Are the Risks Associated with Flash Loan Arbitrage?

The primary risks associated with flash loan arbitrage are smart contract vulnerabilities, network congestion, and front-running. Smart contract vulnerabilities can be exploited by malicious actors to drain funds from a contract.

Network congestion can lead to high gas fees and delayed transaction times, which can eliminate arbitrage profits. Front-running occurs when a malicious actor sees a profitable transaction in the mempool and pays a higher gas fee to have their own transaction executed first, effectively stealing the arbitrage opportunity.

Additionally, flash loan arbitrage is a highly competitive field, and there is no guarantee of success.