Definition ∞ A flash loan attack is a type of exploit that leverages the uncollateralized, instantaneous nature of flash loans in decentralized finance. Attackers borrow a large sum of cryptocurrency without providing collateral, execute a series of transactions to manipulate market prices or exploit protocol vulnerabilities, and repay the loan within the same transaction block, pocketing the difference. These attacks often result in significant financial losses for affected protocols.
Context ∞ The prevalence of flash loan attacks remains a significant concern within the decentralized finance (DeFi) ecosystem. Current discussions often focus on identifying specific vulnerabilities in smart contract logic, such as reentrancy flaws or price oracle manipulation, that facilitate these exploits. Efforts to enhance protocol security and develop more sophisticated detection mechanisms are continuously underway to mitigate these risks.
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