Borrow Millions In DEFI With NO COLLATERAL? FLASH LOANS Explained (Aave, dYdX)

So what are flash loans all about? And how can they be used to borrow millions of dollars worth of crypto with no collateral? You’ll find answers to these questions in this video.
A flash loan is a feature that allows you to borrow any available amount of assets from a designated smart contract pool with no collateral. Flash loans are useful building blocks in DeFi as they can be used for things like arbitrage, swapping collateral and self-liquidation.
Flash loans, although initially introduced by the Marble protocol, were popularised by Aave and dYdX.
So, what’s the catch?
A flash loan has to be borrowed and repaid within the same blockchain transaction.
📖 Post ► finematics.com/flash-loans-ex...
📖 How to Code a Flash Loan with Aave ► finematics.com/how-to-code-a-...
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[@Finematics]

❓What do you think about flash loans? Are they good for the DeFi ecosystem? 👍Hit the like button if you enjoyed this video 🐦Follow Finematics on Twitter ► twitter.com/finematics 💛Support Finematics on Patreon and join our Discord community ► www.patreon.com/finematics

[@chillrain351]

Thank you, wonderful help.😁

[@beyonderssupreme]

Please read my suggetion comment below

[@cicher]

Excellent video! 👏👏 But, *there is an ERROR* 📛: the 0.09% of $100,000 is $90 (not $900), then the loan repay is $100,090 and the profit is *$920* 🤑

[@ToY9CiTo]

He's a Genius! 🧠

[@fakaraka9947]

Hi all, my name is Farah. Currently my son is having problems with a tumor in his head and it could possibly life threatening. I hope someone can help by donating or share this message to others. Estimated cost of the surgery is around 20,000 usd and i needed another 12,000 usd. I'm really thankful if someone can help me. Since we're from different countries around the world, crypto really useful. My husband died last year due to covid-19. Please... If you can't give much, even a little is enough for me.. I just don't want to lost anyone anymore.. Farah, Metamask id, 0x603a656bc46d4716E5e0A1a16a839ADAf2fA3739

[@KaiserKnight-bv3ru]

This is the first video that explains flash loan so clear and understandable. Your work deserve my highest respect.

[@Finematics]

Thank you! :)

[@christopherozarks6285]

These are advanced trading techniques and use cases. If you were able to comprehend all that and figure a way to use it you should be proud of yourself. I would say less than 10% of all traders even know about techniques like that - and only about 2% use them!!

[@user-bm5tw5pb1z]

…..

[@mrmatz408]

Seriously amazing videos! I think you are the only one explaining things with the amount of detail that I can understand.

[@TjSpoonManJacques]

I had six questions on my notepad prior to this video and all six were answered. Freaking amazing! The thorough explanation of anything presented on KZbin! For real for real because I was confused AF 🤣

[@mundoalonso-cuevillas6712]

100% agree! I’m an engineer (not a very good one though), and this is the first time I truly understand a DeFi operation.

[@TjSpoonManJacques]

@@mundoalonso-cuevillas6712 be on the lookout for the gas prices which are making flash loans extremely difficult. Ended a profit I haven't landed a profitable flashlight in over a month 😔

[@shreyashandiyekar7135]

Thanks for keeping me updated with all this new stuff.

[@Finematics]

You're welcome!

[@goldenboatcaptain]

This channel is going to explode with this bullrun. One of the best crypto channels on YT. Keep it up, man. Love your work.

[@Finematics]

Thanks! Appreciate that :)

[@ksiadzgrzesiu69]

Are you kidding? No one is doing research 😂

[@nonenone4461]

Notice that all Cryptos crashed over the 8 months this was posted.

[@LookMomNoHands22]

Please never stop making videos. You and the team are absolutely amazing. Thank you for making the educational journey of DeFi so enjoyable. Once we moon, I’ve got you on some cool project tokens. Promise.

[@tjc9995]

This is such an awesome channel. Great videos and clear explanations. One question: how are you producing and recording these whiteboards?

[@ameen2428]

Highly informative. Thank you, keep on doing this. Love♥️

[@Finematics]

Thanks a lot! :)

[@banzobeans]

Top notch video as usual!!! Thx

[@samuelaavila8285]

Sometimes when I watch your videos I still don't understand quite everything due to the sheer amount of detail of your content and me being pretty new to defi. However, for many of your videos with time in the crypto market I can come back to them and they make complete sense. Thank you for the educational content, it's very good.

[@marcusaurelieus9055]

Great video man ! Really enjoyed it and felt like I fully understood flashloans for the 1st time despite reading in so many places. I think your channel will 100% grow man , keep hustling !

[@Finematics]

Thanks!! Great to hear the video was helpful :)

[@vanillakush4737]

U made me even more in love with defi and is system. Great content,thanks !

[@bobperson1173]

So clear, concise, and great examples!

[@jeremygonzalez4501]

Fascinating. So many things clicked and thoroughly explained. Thank you!

[@WiLDeveD]

This is the best and detailed Explanation of Flash loans i've ever saw. Thanks bro and God Bless.

[@nachobeats4733]

Love your vids mate. I would really like to know your opinion on deflationary farming. Keep teaching us about DeFi

[@nicots]

Excellent explanation. I hope this channel continues to grow!

[@Finematics]

Thanks! I hope so too :)

[@amandac3658]

Amazing explanation, thank you

[@samooxa]

You deserve all the praise man, your channel will moon soon. Congrats & Thank you.

[@Finematics]

Thanks!!

[@muhammadkashif2944]

Finally , someone with a great knowledge . Respect for you !!

[@Finematics]

thank you!

[@simonhansen8205]

This is extremely clear. I now understand. Thank you very much.

[@castro420]

I love your videos, DeFi is a confusing subject this was a very great explanation.

[@Finematics]

thanks! :)

[@cryptorajan4701]

Nice video!!very informative.

[@WibbilyWobblyWonder]

Thanks for making! Top tier education vids

[@sulahmoon558]

I am learning so much with your videos and of course I am subscribing your channel. Some are still difficult to understand 100 % but your contents are super well explained and not so biased which I like so much. it is truly helpful. Keep it up! and thank you!!!

[@Finematics]

Thanks a lot! Glad to hear the videos are helpful :)

[@pkqs9065]

This is gold. Very clearly explained, thanks for the video!

[@Finematics]

Thanks! :)

[@cyclopa]

Amazing clear and detailed video + drawings/animations! 💯 PS: Are you drawing all this yourself too?😯 On some kind of digital canvas, connected to your pc?

[@warrenwaugh6034]

I like the fact that anyone can take advantage of this. Well explained good video. My minds blown away.

[@RsAsksWhy]

Excellent content and explanation, keep em coming, destroyed the like and subscribe buttons!

[@Finematics]

Thanks!!

[@fullslippery]

8:30 1. "Take a Flashloan in DAI to cover the amount of DAI that was borrowed" 2. "Repay your Compound loan with borrowed DAI" 3. "Withdraw your ETH" 4. "Swap your ETH for BAT on Uniswap" 5. "Supply BAT as collateral on Compound. Borrow DAI against your BAT collateral" 6. "Repay Flashloan with borrowed DAI plus fees" "Congrats, you just swapped your collateral from ETH to BAT and paid 0.09% of the borrowed amount for this"

[@noillusion3180]

So it’s completely pointless

[@javierortizmir7873]

These explanations are great!!

[@Finematics]

Thanks!

[@Basil__X]

Loved the explanation, thanks!

[@Finematics]

thanks :)

[@johnkwok6524]

This is great as so many of your videos are! Wondering if you could do one that delves into arbitrage? Thank you for all of your work so far!

[@Finematics]

Thanks! Yes, I will be delving deeper into multiple topics including arbitrage :)

[@anakinskywalkerrr]

This is the best video to understanding flash loan

[@Finematics]

thanks!

[@fleuriadon7765]

Awesome ! Thank you so much

[@katyaolivan6085]

Very well explained!!

[@Finematics]

thanks!

[@udaybabbu13]

this guy is a Genius ...

[@jennachang3269]

Awesome! Thank you :)

[@martinwinter4840]

great vid brotha

[@Finematics]

thanks!

[@holden2966]

Briliant! thank you very much

[@lioruzan2048]

Excellent video

[@Acilias]

Great video once again ! Make one on ethereum rollups please (optimistic, zk rollup etc.)

[@Finematics]

Thanks, great suggestion. I have this topic on my list of things to cover :)

[@resulfuruncu1952]

Kind of feel dumb that i still don’t understand the way a flash loan works, even after this guys video lol

[@gl897]

You've got a new subscriber since I could never understand how they work p

[@jahmoncrypto2781]

Very informative!!!

[@Finematics]

Glad it was helpful!

[@vanillasf]

Amazing content. Impressive to see how banking today looks like the dinosaur age compared to DeFi...

[@geneshen6405]

Great video. But for this concept to really take off, there has to be way more streamlining involved.

[@virayudh]

Great and interesting video.

[@Finematics]

thanks!

[@agentlier6974]

Woww.. You are good man...

[@TjSpoonManJacques]

DAMMIT THAT WAS AMAZING!!! I HAD SO MANY QUESTIONS PRIOR TO THIS VIDEO! THANK YOU MUCH LOVE FROM NEW ORLEANS ❤️💪

[@Finematics]

Thank you!! :)

[@cloudshad0ws]

Great video... Unfortunately, my experience (messing around with aave at least), gas fees the way they are right now it seems pretty difficult to actually utilize flash loans profitably with one of these legitimate ways...

[@abc_12333]

Try MULTIPLIER (a fork of Aave) on Binance Smart Chain. Gas fees are ONLY 5 Gwei

[@andreachiesa5563]

Super interesting content

[@Finematics]

thanks!!

[@quinnxy]

great content

[@Finematics]

thanks!

[@cptn3mo623]

I think I am speaking for the large majority when I say this - you are an incredible help to Beginners / Intermediates wanting to learn more in the crypto space and we are hugely grateful and thankful! Subscribed and have notifications on, keep it up!

[@Finematics]

thank you! 🙌

[@asmitadhungana3790]

Your channel is pure Bitcoin! ;) Keep on delivering the rich contents :D

[@Finematics]

Thanks! :)

[@jljl6485]

incredible video oO

[@Finematics]

thanks!

[@nikolaoskalivas8308]

Awesomeeee duuudeeeeee

[@marcio7708]

You are the best teacher! Thank you!

[@Finematics]

Thanks!! :)

[@evgeniy_moscow_gooner]

I don't understand what the point of collateral swap is. You simply swap one crypto for another to borrow DAI while you could borrow it without swapping. UPD It actually appears that you pay a commission and lose your ETH.

[@tijesuniogunrombi9456]

Maybe you didn't anticipate a value drop in your initial collateral used?

[@robinng5404]

Nice info,,and plz put timestamps

[@vicentebenjamin6972]

I love this video

[@ludacris6600]

But i have seen in other videos that you have to access a site/platform where you ask for the loan, and the interface does all the work you inky have to allow transaction. Where do you browse to?

[@mattn_kk]

This is so cool

[@Finematics]

Thanks!

[@mynameiszoro]

Great video mate! As a viewer I would like to request a video about Mempool bots and front runners. What do you think?

[@Finematics]

Thanks! Yes, this is definitely one of the topics to cover in the future :)

[@mynameiszoro]

@@Finematics Also If you can include how to include the transaction without the mempool if you are a miner. That would be great ! Thanks mate

[@Mrtranquil01]

In the second usecase, whats the advantage of doing that over just swapping the ETH for BAT on uniswap before getting ?

[@AbstractAbsorption]

Hi @Finematics, your "How to code a Flash Loan with AAVE" link takes you to an empty post on the blog. Is there a new one?

[@theflipside2709]

Nice vid, again! Q - How long can one use the flash loan for before they have to repay?

[@Finematics]

Thanks, you only have 1 transaction time which is the same as 1 block time which is around 10-17 seconds on average

[@theflipside2709]

@@Finematics Huh? How can one operate that many steps in 10-17 sec's time??

[@Finematics]

As mentioned in the video this feature is predominantly used by software developers, so it can be programmed that way. Furucombo also can create a transaction with multiple steps for non-developers

[@theflipside2709]

@@Finematics Thank you!

[@becks0303]

For the use case on collateral swap - whats the point of doing this 6 step process to swap my ETH to BAT ? If the objective is to just get ETH to BAT, can't I just literally do step 5 (using my ETH and swapping it for BAT at any AMM ? ) to achieve that ? Why do we need all 6 steps ?

[@Finematics]

Because the coins are used as collateral and are locked in the protocol. They cannot be just swapped.

[@becks0303]

Thanks. But didnt we already withdraw that collateral from compound in step 3?

[@21rejones]

I'm not sure the maths is right on the arb example. The Aave fee is 0.09%, no? Making the fee on a $100,000 loan $90? This makes the profit $920. Am I crazy?

[@Finematics]

Yes, you are correct. I usually double check all the maths, but this one was too simple right? :( I made a correction in the subtitles. Thanks for spotting.

[@arctuuruus]

So the 90 dollar fee is the gas price of swapping all the different currencies right?

[@Nemocuatico]

I click the first link it open in the crypto.com but it's nothing there you said i can loan defi coin without colateral?

[@totalstationandautocad2264]

Nice

[@TheFluffyFix]

Terra anchor was an amazing idea

[@matiasss550]

It was not a hack, no user was compromised neither platforms. User used protocols correctly.

[@prackertracker7189]

8:25 Why do we neet a flash lone here? coudln't we just repay the debt by our borrowt DAI instead of taking a flash loan, to avoid the first 3 steps?

[@DynamicJon]

Kind of a dumb question but if it requires repayment within the same ETH transaction, how much time do you have to do the repayment, must it be within seconds?

[@lr_law4940]

About 13-14 seconds if i am not mistaken

[@atbrightone5724]

@@lr_law4940 how tf do you payback in 3 secs?

[@atbrightone5724]

13*

[@lr_law4940]

@@atbrightone5724 you don’t the program do. You manually couldn’t do it. Imagine it like the money you borrow never stops at one place. It just runs a circle. Lender->you->exchange1->exchange2->you->lender. The lender is the start and the finish. Everything in between is just a checkpoint and(if the flash loan is successful) the money picks up a bag(which is your profit) at exchange2 and drops it at you before it arrives to the finish line(lender)

[@unknownmatrix8424]

i saw your trademark presentation style in one vid of Bankless. are you one and the same, or just a collaboration? nice informative vids i am not wrong to subscribe. Thank you for spreading the financial education to clueless and newbies in crypto like me.

[@Finematics]

Yes, it was just a collaboration :)

[@cyclopa]

Amazing clear and detailed video + drawings! I will subscribe and follow on Twitter immediately 💯 PS: Are you drawing all this by yourself too?😯 On some kind of digital canvas, connected to your pc?

[@Finematics]

Thank you! I use software for this - it's called Videoscribe

[@cyclopa]

@@Finematics Interesting, will look it up for sure!

[@oksmith5171]

Great content as usual. Where can we download the drawing boards?

[@Finematics]

Thanks, it's not possible to download the drawing boards, it's a project within the Videoscribe app

[@aboodabood440]

Great video! But how to bypass the Mempool and the bots all together and include your transaction in a block if you are a miner? is that possible?

[@Finematics]

Good question. Yes, I you are a big miner (or if you know one) you could include a transaction in a block that was never in the mempool, basically avoiding the mempool snipping bots

[@videospride8439]

Please make a video teaching how to borrow

[@Pritchy__]

I have a question around this... suppose you take out a flash loan and then use the token to purchase something (let's say some random product that allows for purchase with a token) and then you refuse to pay back the loan. Since you now obtain this new product, how can this transaction be rolled back? Does the transaction when purchasing the product not get verified until you repay the loan?

[@onekycarscanners6002]

You need to understand atomic transaction. All or none

[@joannechen6850]

Can you make a video about Margin Trading?

[@ritikgulabrani9073]

We need a video comparison b/w binance smart chain and ethereum !??

[@iliavko]

So does this mean that the smart contract has to detect that the arbitrage opportunity exists in order to lend the funds in first place?.. Because this seems to be a riskless loan and that is impossible. There must be a counterparty risk involved, otherwise the interest received by the lender also makes no sense, why would you get a reward for something that represents no counterparty risk?.. I am a person from traditional finance and this makes no sense to me lol

[@iranastarr1598]

Last one month I trying to get borrow(loan)by Huobi&Definitely through digital assets exchange through. And I became tired coz of unknown systems. Now I want to listen it again&again to get a loan by FLASH(DEFI)

[@amitdubey9201]

One query is flash loan still supported by aave for arbitrage using a bot

[@ocupado658]

Cool videos mate, not just the content but also the animations you use. However, there's one thing in this one I dont quite understand - how can one ethereum transaction consist of multiple steps? Do I have to be able to code for that? How do I not know this

[@Finematics]

yes you can code that, you can write a function that interact with a lot of different protocols within the same Ethereum transaction

[@ocupado658]

@@Finematics okay. well, guess it's time to get into solidity then. thanks for replying!

[@the_guy_with_yeeyee_a_haircut]

i have a question, could Crypto Flash Loans be used for a pump and dump scheme? for an example ; i get a Crypto Flash Loan for 1.000.000 uniswap from AAVE and take it and sell of it would that cause the price of Uniswap to drop ???

[@devsutong]

Whats the use of Collateral swap?

[@Rompelarueda]

Explain SmartBCH! The EVM sidechain just launched on BCH that scales ethereum. Up to 1 billion gas every 10 seconds, totally decentralized (no own token, no premine etc), backed by PoW (SHA-256)

[@workstationguy]

@9:30 Why would your ETH be "restored" by repaying a failing DAI loan with another flash loan? Wouldn't ETH collateral that is falling in value remain the same value regardless?

[@workstationguy]

Or is the point that you simply avoid paying liquidation fees

[@q44444q]

I LOVE YOUUUUUUUUUUUUUUUU

[@Finematics]

💛

[@user-nm5tn7td5b]

How I can make sure profits will be more than gas Fees of borrow flash loan

[@ABCDEFGH-or2eb]

I don’t have money to cover the gas fees. Does that mean I can’t get a flash loan?

[@cutflow2]

Is AAVE the only crypto offering flash loans ?

[@infinitynbeyond0786]

Hi could you do an illustration explaining COLLATERAL PAY $COLL i think would be an interesting one :)

[@frodev728]

Smashed

[@shaun9311]

This will be interesting with the EIP-1559

[@AM-pi4hd]

Guys, could anyone explain why should I make a collateral swap? Where is the profit in this action? What prevents me from using BAT as collateral firstly, without further collateral swap ETH-BAT?

[@imhighafyo]

Its for when you dont want to sell your eth or whatever but you need liquidity so you swap for something else, do what you need to do, then when you pay it back you get your eth or whatever back.

[@Dannydrinkbottom]

Love the concept but too much work for me😂