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What Is a “Flash Loan” and How Does It Exploit Composability?

An uncollateralized loan borrowed and repaid in a single transaction, exploiting composability for instant arbitrage or liquidation.
Greeks.Live16.11.25

What Is a “Flash Loan” and How Does It Exploit Composability?

A flash loan is an uncollateralized loan that must be borrowed and repaid within the same blockchain transaction. It exploits DeFi's composability by allowing a user to execute a complex sequence of actions (e.g. arbitrage, liquidations) across multiple protocols instantly.

If the repayment fails at the end of the transaction, the entire sequence is reverted, leveraging the atomic nature of blockchain transactions.

What Is a “Flash Loan” and How Does It Leverage DeFi Composability?
How Do Flash Loans in DeFi Work and What Are Their Primary Use Cases?
What Is the Relationship between Flash Loans and DeFi Composability?
What Is a “Flash Loan” and How Does It Relate to Market Manipulation Risks on DEXs?

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