📸Flash Swaps / Flash Loans
Last updated
Last updated
Allowing the caller contract to receive money upfront, and then pay fees afterward. Flash swaps enable non-principal arbitrage without having to resort to flash loans on other platforms. Flash swapping, or the capability to "borrow" tokens from the forbitswap pool, make some arbitrary transaction with external services, and pay back your originally borrowed funds, all in one transaction. The transaction is atomic, which means that if it fails at any point, the entire transaction is reversed. The significant use case for such a feature is to conduct arbitrage by leveraging a liquidity pool. Moreover, there are other use cases that provide benefits as well, including minimizing gas fees for performing particular DeFi activities, like shutting down a Maker Vault.
Flash Swaps are all-in-one transactions that include borrowing tokens from the forbitswap token pool, using certain tokens for a specific purpose, and then returning those tokens. If any stage of the transaction fails, all stages are reverted, and the tokens remain in their corresponding forbitswap pool. Take a look at the illustration below to see how the buyer may complete the flash swap transaction without holding any tokens. It ensures that the token value is guaranteed to return to the pool, regardless of whether the transaction succeeds or fails, or whether the buyer pays back their borrowed tokens in the same transaction.
Arbitrage trading is a brilliant application for Flash Swaps, as the buyer is bound to make a profit and return the token's initial value to the swap pool. The arbitrage trade's profit is given to the buyer as payment.
The flash loan is one of the most distinctive trade tools in the crypto DeFi industry, allowing users to borrow an unsecured loan directly from the lender without the presence of an intermediary. The smart contract regulates the transactions and makes sure that they are only carried out when all of the contract's stipulated terms have been strictly adhered to.
