Definition ∞ Flash loan utilization refers to the practice of borrowing uncollateralized funds from a decentralized finance (DeFi) protocol and repaying them within the same blockchain transaction. This rapid, atomic sequence allows users to execute complex arbitrage strategies, collateral swaps, or liquidations without needing initial capital. The loan is only granted if the repayment is guaranteed to occur by the transaction’s conclusion.
Context ∞ Flash loan utilization often garners significant attention in crypto news, particularly in reports of DeFi exploits where malicious actors manipulate market prices or drain liquidity pools. While legitimate uses exist, the capacity for rapid, large-scale operations within a single block makes flash loans a critical component in discussions about DeFi security, protocol design, and market integrity.
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