Definition ∞ A flash loan vulnerability refers to a weakness in a smart contract that permits the exploitation of flash loan functionalities for malicious purposes. Attackers leverage these zero-collateral loans, which must be repaid within the same transaction, to manipulate asset prices or drain funds from decentralized finance protocols. Such exploits often occur due to flawed logic in price oracles or reentrancy guards.
Context ∞ Flash loan vulnerabilities are a recurring theme in reports of major DeFi hacks, where attackers execute complex multi-step attacks within a single transaction. Investigations into these incidents focus on the specific smart contract flaws that enabled the exploit and the methods used to manipulate decentralized exchanges or lending protocols. The ongoing arms race between protocol developers and exploiters underscores the critical need for rigorous smart contract auditing.
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