The misunderstood flash loan
Original title: "THE GREAT FLASH LOAN"
Original source: Rekt
Compilation: 0x26
If you fell off your bike and scraped your knee, would you ditch the bike to avoid future injury?
If your partner cheated on you, would you give up your physical and emotional companionship and avoid dating and new relationships for the rest of your life?
When a plane crashes, do you ban aviation despite the benefits of mass transit?
No. You'll use it as a learning experience in order to reduce the chance of making the same mistakes while continuing to take advantage of the wealth of opportunities they present.
This is where I disagree with many of the "flash loans are bad" claims.
The notoriety of flash loans
I admit that when people hear flash loans, they inevitably think of huge arbitrage and exploits. The latter stands out because it is the most prevalent recent phenomenon, and in most cases the two are inexplicably intertwined.
Generally speaking, when you execute a successful arbitrage, you are helping optimize the DeFi ecosystem for a specific assets bring about pricing equilibrium in different markets. When you execute a flashloan-powered arbitrage trade through automated bots, you are essentially optimizing the ecosystem at scale.
Flash loans are not a sin, nor should they be viewed as such.
For example, while in 19th century Britain, the Victorian era was often marked by overall progress and sophisticated Known for industry (e.g. railways, municipal buildings, etc.). But it also inadvertently contributed to the clustering of various working classes near major manufacturing centers, causing extreme social unrest. Under the melting pot of poverty and overcrowding in these areas, it is no surprise that organized crime thrives. Fewer opportunities force pickpockets to become robbers, and robbers become more reckless.
The way geeks treat flash loans is actually similar to that of VCs and Hedge funds are the same. Flash loans only provide a way to obtain a large amount of funds in the short term, and all attacks using flash loans can be completed without flash loans.
For better or for worse, flash loans have inspired a big melting pot. Talented programmers have different ethics to find the immeasurable wealth in the DeFi world.
In Robots, Runners, Stalkers and Telegram Small Groups In the world of DeFi where opportunities are limited, it should come as no surprise that some people, including miners, use their talents for nefarious activities for profit.
Limited opportunities turn some white hats into gray hats and gray hats into black cap. (Rhythmic note, white hats will report vulnerabilities to the project side, so that the project side can modify the vulnerabilities immediately. Black hats use their own strength to find or develop software vulnerabilities and attack methods, and profit from them. Gray hats are between the two between those.) Since the beginning of this year, there have been a large number of flash loan-powered exploits, and they are all well documented, so I won’t repeat them here. But what I'm going to do is make it clear (albeit arguably) that this is a good thing.
The furnace of flame
Even as the details and investigation of (Akropolis + Origin + Cheesebank) continue as of this writing, I still firmly believe that this is the evolutionary journey the DeFi world needs to go through in order to mature into a sustainable ecosystem.
The process of weeding out weak projects makes DeFi safer in the long run as only time-tested system.
Recall how many dubious ERC20 projects launched ICIO at the peak of irrationality in 2017 - they The growth and validity of the logical background is uncontrolled and clearly unsustainable. Fast forward to 2020, and the DeFi boom has brought about the growth of similar .finance projects, only this time these unlimited composability projects are constantly being tested by developers of various "color" hats.
Flash loans enable problems to be exposed earlier, which forces the project to constantly adjust and will Safety comes first.
He who does not learn from history will fail. And those who do, get better for it. Of course, not every project that gets attacked heals as easily as a bruised knee from cycling, but what is lost is what is gained, right? (You can't make an omelette without breaking eggs)
Twitter Fiona Kobayashi and Alex Svanevik recently on Twitter This sentiment is summed up nicely by an interaction:
Fiona's poll shows that users think flash loans are beneficial to the DeFi ecosystem is favorable (accounting for 81%).
Alex said that within 3 years from now, he will use the test contract.
More than that
Flash loans have other advantages that are well documented but often overlooked in debates about the effectiveness of flash loans. If you actually research the benefits of flash loans, rather than just blogging about the latest flash loan arbitrage attack, you will realize that this is definitely a positive aspect for the entire DeFi landscape.
When the value of the user’s collateral plummets, based on Flash Loan ’s self-liquidation can help users resist the threat of liquidation by paying down debt quickly, exchanging collateral for debt tokens, and using it to repay flash loans, all at the cost of 9bps + GAS fee instead of 13 % liquidation penalty.
Lightning-based The self-liquidation of the loan can help users resist the threat of liquidation by paying down the debt quickly, exchanging the collateral for the debt token, and then using it to repay the flash loan, all at the cost of 9bps + GAS fee instead of 13% liquidation penalty. In a similar vein, flash loan collateral swaps allow you to swap an underperforming collateral with an appreciating collateral without the hassle of artificially closing accounts or obtaining additional capital. It’s even possible to refinance quickly by migrating loans from one protocol to another.
Flash loans have the ubiquitous characteristics of DeFi, which has also attracted the attention of TradFi and CeFi. When combined with user-friendly tools like Furucombo and DefiSaver, they abstract away the complexities of the DeFi system for users and create a fairer and easier platform for everyone.
Flash loans are easily one of the key differentiators for mainstream adoption.
Therefore, we need to take a balanced and fair approach to assessing whether the DeFi world is good or bad.
By the way, the coexistence and balance of the two perspectives in historical societies is called the "Victorian Compromise".
Reference reading:
《In the dark forest, it is not only "preemption" that can make a profit》
《Do you really understand flash loans? 》
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