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What Is a ‘Flash Loan Attack’ and How Does It Exploit DEX Protocols?

A flash loan attack uses a massive, uncollateralized, instant loan to manipulate asset prices on a DEX for profit within one transaction.
Greeks.Live19.11.25

What Is a ‘Flash Loan Attack’ and How Does It Exploit DEX Protocols?

A flash loan attack exploits decentralized finance (DeFi) protocols by using an uncollateralized loan, which must be repaid within the same blockchain transaction. The attacker uses the borrowed funds to manipulate the price of an asset on a decentralized exchange (often by draining liquidity) and then executes a profitable trade, repaying the loan instantly.

The entire sequence happens in one atomic transaction, leaving no time for intervention.

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