90% of “Flash Loan” attacks are not hacks in the technical sense, but rather actions carried out within the rules of the smart contract system itself.

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📌 What does this mean?

A flash loan allows users to borrow funds without collateral as long as the loan is borrowed and repaid within the same transaction block. The system prevents funds from being withdrawn before the transaction is completed. However, malicious actors can exploit this mechanism by manipulating price feeds or market dynamics.

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🔍 Example:

In cases like the 2020 bZx attack, attackers used flash loans to trick price oracles and walk away with profits. Technically, they didn’t break into the system or exploit a bug — they leveraged design flaws. This is why, from a legal standpoint, such events might not even be classified as “hacks.”

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💡 The interesting part:

Instead of redesigning their systems to be more resilient, some projects started banning flash loans altogether. But this goes against the very ethos of DeFi — open and accessible finance for everyone.

90% of “Flash Loan” attacks are not hacks in the technical sense, but rather actions carried out within the rules of the smart contract system itself.

---

📌 What does this mean?

A flash loan allows users to borrow funds without collateral as long as the loan is borrowed and repaid within the same transaction block. The system prevents funds from being withdrawn before the transaction is completed. However, malicious actors can exploit this mechanism by manipulating price feeds or market dynamics.

---

🔍 Example:

In cases like the 2020 bZx attack, attackers used flash loans to trick price oracles and walk away with profits. Technically, they didn’t break into the system or exploit a bug — they leveraged design flaws. This is why, from a legal standpoint, such events might not even be classified as “hacks.”

---

💡 The interesting part:

Instead of redesigning their systems to be more resilient, some projects started banning flash loans altogether. But this goes against the very ethos of DeFi — open and accessible finance for everyone.