Flash Loan
A type of DeFi loan that is borrowed and repaid within a single blockchain transaction, requiring no collateral. Often used for arbitrage opportunities.
Why It Matters
Flash loans are a unique DeFi innovation allowing users to borrow funds without collateral, provided they return them within the same transaction. This concept matters for advanced users looking to exploit opportunities quickly and efficiently.
Example
For instance, a trader might use a flash loan to buy an undervalued asset on one exchange and sell it on another for a profit, all without needing to provide upfront collateral. This highlights crypto's innovative potential.
Beginner Context
For newcomers, understanding flash loans is vital for recognizing the complexities of DeFi. They represent a cutting-edge use of blockchain technology but require advanced knowledge to navigate effectively.
Mike Starr
Founder, CryptoWizardTools · M.S. Organizational Management
Last reviewed: August 2026
Related Terms
On-Ramp
A service or method that converts fiat currency (like USD) into cryptocurrency. Exchanges, payment apps, and debit-card purchases are common on-ramps. The ease, cost, and availability of on-ramps vary by country.
Dead Cat Bounce
A temporary, small price recovery during a sustained downtrend, which is followed by further declines. The term comes from the saying that "even a dead cat will bounce if it falls from high enough." It is a false signal of recovery, not a real reversal.
Bonding Curve
A mathematical curve that defines the price of a token as a function of its supply. As more tokens are minted, the price rises along the curve; as tokens are burned, the price falls. Bonding curves are used in automated market makers and token launches.
ERC-20
A technical standard for creating fungible tokens on the Ethereum blockchain. Most tokens in the DeFi and ICO ecosystems are ERC-20 tokens, including USDT, LINK, and UNI. The standard ensures all tokens work the same way on Ethereum.
Cross Chain
Refers to the ability of two or more separate blockchains to communicate and exchange data or assets with each other. Cross-chain bridges enable tokens to move between networks like Ethereum and Solana.