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Flash Loan

An uncollateralized loan that must be borrowed and repaid within a single transaction.

A flash loan is a DeFi loan that requires no collateral, but must be borrowed and fully repaid within the same blockchain transaction, or the entire transaction is reversed as if it never happened.

Because the loan can't exist outside that single transaction, flash loans are generally used for advanced, automated strategies, such as arbitrage, rather than everyday borrowing. See Kaavon's "Oracle" glossary definition for a related, separate DeFi dependency worth understanding alongside this one.

Examples

A flash loan might be used to exploit a brief price difference between two exchanges within one transaction.
If a flash loan isn't repaid by the end of the transaction, the whole transaction fails and reverts.