DeFi & Yield

What is a flash loan attack?

A flash loan attack is an exploit where someone borrows a large uncollateralized sum within one transaction and uses it to distort a protocol's prices or logic for profit, repaying the loan before the transaction ends. Attackers often target weak price oracles, temporarily moving a thin market so a lending or trading contract misvalues assets. For example, the borrowed funds skew a single price source, the contract acts on the wrong figure, and the attacker pockets the difference. The borrowed capital is not the flaw; the underlying contract's reliance on a manipulable price is. Sound oracle design mitigates it.