Flash Loans Explained: Uncollateralized DeFi Borrowing in One Transaction

Flash loans allow borrowing millions with zero collateral — if repaid within the same transaction. This guide explains how flash loans work, legitimate use cases, and their role in DeFi attacks.

Flash loans are DeFi's most counterintuitive innovation: you can borrow $100 million with zero collateral, no credit check, and no risk to the lender — as long as you repay it all in the same transaction. The atomicity of blockchain transactions (everything happens or nothing happens) makes this possible.

How Flash Loans Work

Legitimate Flash Loan Use Cases

Flash Loans in DeFi Attacks

Flash loans amplify the capital available for DeFi attacks. The Beanstalk hack ($182M) used a flash loan to acquire temporary governance majority and pass a malicious proposal. Most oracle manipulation attacks use flash loans to temporarily distort prices. Flash loans are tools — their use in attacks reflects vulnerable protocol design, not flaws in flash loans themselves.