Glossary
Flash Loan
An uncollateralised loan that must be borrowed and repaid within a single transaction.
A flash loan lets you borrow a large amount with no collateral, provided you return it plus a fee inside the same transaction. One transaction means the entire sequence either completes or reverts entirely.
In practice they are arbitrage and manipulation tools, not consumer credit. In a single block, a bot can borrow, exploit a price difference between pools, repay, and keep the difference.
Most large DeFi hacks started with a flash loan because it removed the capital requirement for an attack. The vulnerability was in the protocol, but the loan provided the balance to reach it.
Related terms
Airdrop
Free tokens distributed to wallet addresses, usually to reward early users of a protocol.
AMM
Automated Market Maker — a protocol that prices assets with a formula instead of an order book.
APR vs APY
APR is the yearly rate without compounding; APY includes compounding and is always higher.
ATH
All-Time High — the highest price an asset has ever traded at.
Bear Market
A prolonged decline, conventionally 20% or more from recent highs.
Bull Market
A prolonged rise driven by new demand, easy credit and rising confidence.