What’s AAVE flash loans?

AAVE offer a featured called flash loans. It’s a cryptocurrency loan where you can borrow high amount of money without having to put up any collateral.

That’s sound too good, what’s the catch?

The catch is you must pay it back in the same transaction, in same cryptocurrency block that it was borrowed in you must pay it back.

Why in the world would someone take a loan and pay it back right away?

Because of arbitrage

Imagine you can buy Ethereum at Binance at $1 and sell it to Coinbase for $1.01, every time you do this you would earn 0.01 cent.

Now imagine you borrow $1000 and buy and sell to earn 0.01 cent per each dollar. You just made $10 in a few secs, because 1000x.01 = 10

Now imagine you borrow $10,000 and buy and sell to earn 0.01 cent per each dollar. You just made $100 in a few secs, because 10,000x.01 = 100

Now imagine you borrow $100,000 and buy and sell to earn 0.01 cent per each dollar. You just made $1000 in a few secs, because 100,000x.01 = 1,000

Now imagine you borrow $1,000,000 and buy and sell to earn 0.01 cent per each dollar. You just made $10,000 in a few secs, because 1,000,000x.01 = 10,000