How Do Flash Loans Work and What Are the Risks?

[kevin1]

Flash loans allow borrowing without collateral as long as the loan is repaid in the same transaction. They enable arbitrage, liquidation, and collateral swaps but are highly technical and prone to smart contract exploits if not carefully executed.

[Abdul Khan]

Flash loans allow instant, collateral-free borrowing but carry major exploit risks if coded poorly.

[alex10]

They’re innovative yet dangerous — a reminder that DeFi rewards those who understand its complexity.