A flash loan is a type of short-term borrowing that allows users to take out loans without needing collateral, as long as they return the borrowed amount within a single transaction block. This means that the loan must be repaid almost instantly, usually within a matter of seconds.These loans are primarily used for arbitrage opportunities, where users can profit from price differences on various exchanges. For example, someone might take out a flash loan to buy an asset at a lower price on one platform and sell it at a higher price on another. Since the entire process is executed in one transaction, the lender is secured against the risk of default.Flash loans are most commonly found on decentralized finance (DeFi) platforms and rely on smart contracts to automate the borrowing and repayment process. If the loan is not repaid before the transaction ends, the transaction fails altogether, ensuring that the lender does not lose any funds. This innovative financial tool allows for quick and versatile trading strategies without the need for upfront capital.