Can I Use Flash Loans Without Capital for Arbitrage?

Yes, flash loans allow you to engage in arbitrage trading without needing initial capital. Unlike traditional loans, flash loans do not require any collateral. The loan is granted and must be repaid within the same transaction block. This feature is particularly useful in crypto arbitrage, where the objective is to borrow funds, exploit market inefficiencies, and repay the loan instantly.

With flash loans, a trader can borrow assets, use them to take advantage of price discrepancies between different exchanges or platforms, and return the loan in the same transaction. This means that traders can potentially profit without having to risk their own funds. The only costs associated with flash loans are transaction fees, and if the trade is profitable, the trader gets to keep the difference.

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