Flash Loan
Definition
A flash loan is an uncollateralized loan that must be borrowed and repaid within a single blockchain transaction. If repayment fails, the entire transaction reverts as if it never happened. Flash loans enable arbitrage and refinancing strategies without capital, but have also been used in many DeFi exploits to manipulate prices and drain protocols. Aave and dYdX are the largest flash loan providers.
Why Does This Matter?
Understanding Flash Loan is essential for anyone investing in cryptocurrencies or working with blockchain technology. This concept directly influences how projects are valued, how markets behave, and what risks and opportunities exist for investors.
How Does CryptoValue Use This?
At CryptoValue, fundamental concepts like Flash Loan feed into our proprietary Value Score — a rating from 0 to 100 based on 10 on-chain and market metrics. Our goal is to help you identify undervalued and overvalued coins, rather than just looking at price.