Description: A flash loan is a type of unsecured loan that must be taken and repaid within a single transaction block. This mechanism is primarily used in the realm of decentralized finance (DeFi) and is based on blockchain technology. The most distinctive feature of flash loans is that they allow users to access large sums of capital without the need for collateral, as long as the loan is repaid within the same transaction block. This means that the borrower must execute a series of operations that generate enough value to cover the loan amount plus any associated fees, all within an extremely limited timeframe. The instantaneous nature of these loans makes them attractive to traders and developers looking to take advantage of arbitrage opportunities or execute quick transactions without committing long-term capital. However, they also carry risks, as if the borrower cannot repay the loan in the stipulated time, the transaction will be reverted, as if it never occurred. This ensures that the lender does not incur losses, but it also means that the borrower must act with precision and speed to avoid transaction failures.
