What Is a Flash Loan and How Can It Be Used to Amplify a Sandwich Attack?

A flash loan is a type of uncollateralized loan in DeFi that must be borrowed and repaid within the same blockchain transaction. An attacker can use a flash loan to amplify a sandwich attack by borrowing a massive amount of capital to execute the 'buy' part of the sandwich.

This large, borrowed trade creates a huge price impact, maximizing the profit from the victim's trade. The attacker repays the loan in the same transaction, never needing to put up collateral.