As informed in our crypto lending 2.0 article, flashloan is one of the under collateral loans. Those who have the technical knowledge can leverage this loans for arbitrage, be a liquidator, and leverage yield farming. The possibility may not just end with the following function. Remember, crypto innovation is lighting speed.
Thus, I had explained in coding with Solidity (updates 7) why I had fixed my alternate path to learn flashloan.
So, how flashloan works and how do they earn by providing this service?
- Flashloan is operate in the realm of DEFI and operate under a smart contract
- loan amount is from depositor who deposited into the Flashloan provider vault
- depositor will earn a decent interest from every flashloan executed.
- Interest fee may vary for borrower.. for Aave, the fee is 0.09% and Dodo is 0.00%
- Depend on which network you are interacting, Eth network generally consume alot of gas fee, there for the function of your flashloan may need to be profitable to return the borrowed money + gas fee + interest fee
- Therefore, I will be using polygon or other layer 2 scaling protocol for flashloan.
- The execute function will be arbitrage (tri angular or cross Dex arbitrage).
Stay tune for more updates!
Flashloan provider