Flash Loan
Since it is possible to borrow 100 million yen unsecured and pay it back in seconds with a fee of 90,000 yen, arbitrage opportunities are being executed with gusto, and liquidity is increasing.
[Borrow and pay back 100 million in seconds ~Aave Flash Loan in Ropsten~ |by Yuya Sugano |Medium --- Borrow and pay back 100 million in seconds ~Aave Flash Loan in Ropsten~ | by Yuya Sugano | Medium https://yuyasugano.medium. com/%E7%A7%92%E9%80%9F%E3%81%A71%E5%84%84%E5%80%9F%E3%82%8A%E3%81%A6%E8%BF%94%E3%81%99-aave-flash-loan-in-ropsten-ebef622760cd]
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A Flash Loan is an unsecured short-term loan offered by the DeFi (decentralized finance) protocol. Its main features are as follows
No collateral required: Unlike regular loans, Flash Loans do not require collateral to be provided.
Ultra-short term: all borrowing and repayment takes place within a single transaction. That is, they are completed within a few seconds.
Equal repayment: You must repay the exact same amount as you borrowed. No interest is charged, but fees may apply.
Technical knowledge is required: Since using Flash Loan requires the development of a smart contract, a certain level of technical knowledge is required.
[Arbitrage: Flash Loans are often used for transactions that require large amounts of temporary capital, such as arbitrage transactions that take advantage of price differences across multiple exchanges.
Flash Loans make it possible to temporarily raise large amounts of funds and use them to make a profit. However, there are high technical hurdles and risks involved, as everything must be completed within a single transaction. Currently, major DeFi protocols such as Aave, dYdX, and Uniswap offer Flash Loan capabilities.
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