Flash Loan

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Flash loans are innovative financial tools that leverage smart contracts to offer instant, risk-free lending. Since the loan is repaid within a single transaction block, there's no risk to the lender. Borrowers often use flash loans for arbitrage-buying tokens on one exchange and selling on another for profit-or for complex DeFi strategies like collateral swapping or liquidations. However, flash loans have also been used in high-profile exploits, where attackers manipulate prices via oracle or liquidity manipulation to profit. This has sparked debates around the need for improved security measures in DeFi protocols. Despite the risks, flash loans represent a groundbreaking evolution in financial services by enabling users to access vast liquidity instantly without any collateral.

Related Words

Fork

A fork occurs when a blockchain splits into two paths, usually due to a change in protocol. A soft fork is backward-compatible, while a hard fork creates a separate chain, often with different rules or upgraded features.

FOMO

FOMO (Fear Of Missing Out) refers to the anxious urge to invest during rapid market gains. It often leads to impulsive buying driven by hype rather than research and strategy.

Fiat

Fiat is a government-issued currency like the US Dollar, the Euro, or the British Pound. Unlike cryptocurrencies, fiat is centralised, regulated, and commonly used as a gateway into the crypto market.

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