Glossary
Flash Loan
An uncollateralized loan that must be borrowed and repaid within the same transaction — if it isn't, the entire transaction reverts and no funds move.
Flash loans exploit a property unique to atomic transactions: either everything in the transaction succeeds, or nothing happens at all. A contract borrows tens of millions, uses them inside the same call — arbitrage, refinancing a debt position, performing a liquidation — and repays the loan plus a small fee at the end.
No collateral is required because failure to repay reverts the entire sequence. Flash loans have been used for legitimate arbitrage, and for some of the largest single-transaction exploits in DeFi history.