What Is the Primary Risk Associated with Uncollateralized Lending like Flash Loans?

The primary risk is the potential for market manipulation and smart contract exploitation, as seen in price feed attacks. While flash loans themselves are a legitimate DeFi tool for arbitrage, their zero-collateral nature allows attackers to deploy massive capital instantly.

This power can be weaponized to exploit logic flaws in vulnerable smart contracts, leading to significant financial loss for the protocol and its users. The risk is not in the loan but in the subsequent malicious use.