Flash loan

An uncollateralized loan that must be borrowed and repaid in a single transaction.

A flash loan is a DeFi primitive that lets anyone borrow any amount of assets without collateral, provided the loan is repaid within the same transaction. If the loan isn't repaid by the end of the transaction, the entire transaction reverts as if it never happened. Aave and dYdX popularized flash loans for legitimate uses like arbitrage and collateral swaps.

Flash loans also enable a class of exploits: an attacker borrows enormous amounts, uses them to manipulate oracle prices or governance voting power, executes the attack, and repays the loan, all in one transaction. Flash loan attacks have drained over $1B from DeFi protocols since 2020.