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

It is an uncollateralized loan borrowed and repaid in one atomic transaction, leveraging composability for massive, risk-free arbitrage or exploits.
Greeks.Live16.11.25

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

A flash loan is an uncollateralized loan that must be borrowed and repaid within the same atomic blockchain transaction. It leverages DeFi composability by allowing a user to chain multiple protocol interactions (e.g. borrowing from a lending pool, trading on a DEX, and repaying the loan) into a single, complex transaction.

This enables massive, temporary capital to be deployed for arbitrage or liquidations without needing initial capital, but it also poses a systemic risk when used to exploit price discrepancies across composable protocols.

What Is the Relationship between Flash Loans and DeFi Composability?
What Is a “Flash Loan” and How Is It Enabled by Smart Contracts?
What Is a Flash Loan and How Is It Often Used in MEV Strategies?
What Is a “Flash Loan” and How Does It Relate to Market Manipulation Risks on DEXs?

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