Flash Loan Attack
An exploit using an uncollateralized loan repaid in one transaction to manipulate prices and drain a protocol.
A flash loan lets anyone borrow huge sums with no collateral, provided the loan is repaid within the same transaction. Attackers weaponize that. They borrow millions, use the capital to skew a thin liquidity pool or oracle price, exploit a protocol that trusts that price, and repay—all atomically.
The 2020 bZx and 2022 Beanstalk hacks worked this way; Beanstalk lost about $182 million in seconds. Defenses center on robust price oracles, like time-weighted averages or Chainlink feeds, that a single transaction can't move. Code that reads spot prices from one pool is the usual hole.
Related terms
An uncollateralized loan that must be borrowed and repaid within a single blockchain transaction, or it never happens at all.
OracleA service that feeds outside data, like asset prices, into smart contracts, which otherwise cannot see anything beyond their own blockchain.
DeFi (Decentralized Finance)Financial services run by code on public blockchains, letting people trade or borrow without a bank.
Liquidity PoolA pot of tokens locked in a smart contract that traders swap against, with prices set by a formula.