Flash Loans Explained: Zero-Collateral DeFi in One Transaction

Flash Loans Explained: Zero-Collateral DeFi in One Transaction I remember the first time I saw a flash loan attack in the wild. It was 2020, watching $45 million evaporate from bZx in a single block. My initial reaction? "That's... actually genius. And completely terrifying." Flash loans broke something fundamental we thought we understood about finance: the collateral model. For years, everyone assumed DeFi needed overcollateralization because blockchains can't do credit checks. Then Aave said, "what if we just... don't?" You borrow millions, execute whatever trades you want, then repay plus fees—all in one atomic transaction. If you can't repay? The entire transaction reverts like it never happened. This isn't theoretical anymore. Flash loans have become actual infrastructure. Legitimate arbitrage, liquidations, oracle fixes—they're everywhere now. But I've also watched them used for some of the slickest hacks imaginable. Understanding how they work isn't optional if you're building