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by nostrademons
2209 days ago
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Flash loans are one example. These are zero-collateral, low-fee loans that are paid back at the end of the transaction. If the loan fails to be paid back, the whole transaction that made it unwinds, which means the risk to the lender is zero despite the possibility of loans being millions of times greater than the borrower's assets. They've been used mostly for questionable purposes (largely exploiting oracle attacks on poorly-written DEXes), but there's something very interesting about completely removing capital availability from the constraints on a market participant. It means any arbitrage opportunity can be exploited by anyone, regardless of how much it needs to be levered up to be worthwhile, and so basically democratizes financial profiteering. |
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