What are flash loans, and why are they controversial?

[chainsniff]

A: Flash loans are uncollateralized loans executed in a single transaction block. Use cases include:

Arbitrage & liquidation: Borrow, trade, and repay instantly to capture profits.

Protocol testing & security audits: Simulate attacks to identify vulnerabilities.

Risks: Exploits on vulnerable DeFi protocols have caused multi-million-dollar losses.

While innovative, flash loans require deep technical knowledge and careful smart contract risk assessment.

#FlashLoans #DeFiSecurity #SmartContracts

[Abdul Khan]

Flash loans allow instant, uncollateralized borrowing — but they’re also used in many DeFi exploits.

[Nahid Hossen]

They showcase DeFi innovation and risk — powerful for arbitrage, dangerous for security gaps.