Definition ∞ Flash loan preparation refers to the strategic planning and setup of a series of actions to exploit a decentralized finance (DeFi) protocol using a flash loan. This involves identifying vulnerabilities in smart contracts, calculating optimal arbitrage opportunities, and scripting complex transaction sequences. Attackers carefully arrange multiple steps within a single atomic transaction, borrowing a large sum without collateral, executing various trades, and repaying the loan within the same block. Successful preparation requires deep technical understanding of smart contract logic and market dynamics.
Context ∞ Flash loan preparation is a recurring theme in reports of DeFi exploits, where attackers leverage protocol weaknesses for illicit gains. The situation highlights the inherent risks within composable DeFi ecosystems and the need for rigorous security audits. A critical future development involves the implementation of advanced security measures, such as real-time anomaly detection and more robust oracle designs, to mitigate the effectiveness of such coordinated attacks.
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