Flash Loan

A Flash Loan is a unique, uncollateralized loan in decentralized finance (DeFi) that allows a user to borrow a large amount of assets without any upfront collateral, provided the entire borrowed amount, plus a small fee, is repaid within the same atomic blockchain transaction. This mechanism, primarily facilitated by smart contracts on platforms like Aave and Balancer, leverages the all-or-nothing nature of blockchain transactions to guarantee repayment, making it a powerful tool for arbitrage, collateral swaps, and liquidations.