What Is the Profit Mechanism for an Arbitrageur Using a Flash Loan?

The arbitrageur's profit mechanism is the price difference between two exchanges, minus the flash loan interest and gas fees. They borrow a large amount of capital, use it to execute the low-cost purchase on Exchange A and the high-cost sale on Exchange B, and then repay the loan from the proceeds.

The net positive difference is the profit, which is extracted in the same atomic transaction.