How do flash loans work in the context of decentralized finance?

1 answers

• Nov 25, 2021 · 3 years ago
  Flash loans are a revolutionary concept in decentralized finance. They enable users to borrow a large amount of funds without any collateral, and repay the loan within the same transaction. This allows traders and investors to take advantage of short-term opportunities and execute complex trading strategies. Flash loans are particularly popular in the world of arbitrage, where traders can exploit price differences between different decentralized exchanges. However, it's important to note that flash loans are not without risks. They are vulnerable to market manipulation and other forms of exploitation. Therefore, it's essential for users to exercise caution and thoroughly understand the risks before engaging in flash loan transactions.
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