In the world of decentralized finance (DeFi), flash loans have become a popular tool for borrowers to access funds quickly and without collateral. However, some investors are now considering a new approach to flash loans by dividing the profit among those who contribute capital to fund the loan.
Under this model, investors contribute capital to fund a flash loan, and in return, they receive a share of the profit (if any) generated by the loan. The profit distribution can be structured in various ways, with the exact terms being agreed upon by the investors and the borrower.
One potential benefit of this approach is that it allows investors to participate in the potentially lucrative world of flash loans without having to assume the full risk of the loan themselves. By contributing only a portion of the capital needed for the flash loan, investors can limit their exposure to the risks involved.
This could be done on Ethereum network where a transaction cost is extremally high compare to alternative. Due to the high traded volume on this chain, the risk is enticing and to great to be ignore.
However, it is important for investors to carefully consider the risks involved with this approach. Flash loans carry a high level of risk due to the lack of collateral and the short repayment period, and investors could still potentially lose their entire investment if the borrower is unable to repay the loan. It is important for investors to thoroughly research the borrower and the proposed use of the flash loan to ensure that it aligns with their investment goals and risk tolerance.
Overall, the concept of fractionalized flash loans offers a new way for investors to participate in the DeFi space, but it is important for investors to carefully assess the risks involved and only invest what they can afford to lose.