Step-by-step Guide to Performing Flash Loans with UniLend
Flash loans are a unique tool in the DeFi technology stack that allows users to borrow without collateral. In this case, users can borrow assets from a specific smart contract liquidity pool risk-free as long as they return the assets at the end of the transaction.
In order to run a profitable flash loan, a strategy must be formulated in advance, as fees will be charged when performing the flash loan (although UniLend flash loans are much more efficient and cost-effective than other leading flash loan products). Flash credits are usually taken for specific DeFi strategies, arbitrage games are one of the most popular, but they can be used for any required task.
Read more about UniLend flash loans here: https://docs.unilend.finance/flash-loans
Flash Loan Example
An example of a flash loan carried out via UniLend can be found here: https://etherscan.io/tx/0xc6c2add63c0dc951d2598c43f1993f66d91bbfa3791186945c574e5c7d3b5179
In this example, the user borrowed 150,000 UFT without providing liquidity to UniLend, repaid 150,000 UFT plus 75 UFT Flash loan fee, and completed all these transactions in a single transaction. 22.5 UFT was received for initiatives that benefit the UniLend community.
Please note that the implementation of Flash credit is a complex process and the user must have a solid understanding of Solidity to fully understand the structures and models used in smart contracts.
The structure of how Flash Credits are named for Developers is as follows:
https://docs.unilend.finance/flash-loans/performing-flash-loans
Flash Credits Usage Cases/Applications
Flash loans can be a great way to intermediate between decentralized exchanges without providing initial liquidity. For example, if a user is using two DEXs, they can borrow an asset, trade on Exchange 1, and then trade on Exchange 2 for an arbitrage game and repay the loan. Any amount left after repayment of the loan is an advantage to the user.
Flash loans can be a temporary market maker for the decentralized exchange of limit order books. For example, Uniswap v3 uses limit margin offers. A user can potentially place a large limit order to allow one of the bots to enter smart contracts temporarily into buy positions, or to make the bots temporarily enter short positions by placing an ideal limit order for a sell.
Other use cases are processing crypto loans or refinancing crypto loans.
Alpha Leak: UniLend Rapid Loan Grant Program Coming Soon
There are many more flash loan use cases, many of which have yet to be discovered. To encourage acceptance and accelerate innovation, the UniLend team, therefore, plans to launch a grant scheme for the integration of rapid loans. Several partners are currently exploring use cases of our fast loan solution.
