Flash loans are a hot right now, because they've opened up a world of possibilities for blockchain developers and also cryptocurrency traders to borrow millions of dollars in cryptocurrency with zero money.
What is a flash loan?
Flash loan is only valid within a single blockchain transaction. Flash loans fail if the borrower does not repay its loan at the end of transaction or if the condition of repayment is not satisfied. And you can borrow literally millions of dollars or cryptocurrency as long as you pay it back instantly. And you might say, Oh, that's cool.
But why does it even matter if I can borrow it if I have to pay it back immediately?
Well, that's because the blockchain supports complex cryptocurrency transactions, which means basically, you can borrow the money, and then trade it and then pay it back on the same transaction.
And this opens up the door for all kinds of possibilities for trading. But the most prominent use case is arbitrage, that's where you take advantage of price discrepancies between different cryptocurrency exchanges.
So when a cryptocurrency costs $100 on exchange A, and then $101 on exchange B, well, you could just buy it on exchange A and then sell it on exchange B. And the cool thing about flash loans is that you don't even have to own any of this $100 cryptocurrency in order to perform this operation. In fact you only profit $1 if you spend $100 on exchange of B. But what if you perform the same combo 10 times, you profit $10 or what if 10,000, you profit $ 10,000.
Furucombo allows you to leverage the power of decentralised finance with the click of a button.
Furucombo gives you access to all these different decentralised finance protocols, you can create little combos and make profits.
At first you will see a simple combo already set up for you.
You can create your own custom ones and profit them.
First you need to connect your wallet.
Click the plus icon and this is going to show you all the different money Legos that you can use to create your combo.
Click on the Aave flash loan . what we're going to do is take a flash loan out from Aave, swap it on uni swap and then arbit on Khyber swap, and then pay the flash loan back.
let's just borrow like 0.1 ethereum and then click Set.
You'll see that it pops up a second block here. Well that's paying the flash loan back. So,then you have to pay back 1 ether and a small 0.00009 eth fee . But don't worry, when you swap you will earn more than 0.00009 eth and remember this when flash loan is money actually coming out of your wallet.
Second step is to swap it on uniswap v2, again click plus icon > click uniswap v2 > enter 0.1 eth and exchange it to BAT token then click set.
then we want to do one more action here. So after purchased BAT from uniswap v2, sell bat on balancer, so quick swap token on this.
Third step is to click on the plus icon again find balancer >select BAT to ethereum > max the Bat amount and set. And so this gives you a visual understanding of how this works.
Final step is to drag and drop the paying back flash loan block to the end.
Now you see we're profiting 0.01331 Eth and 0.00009 eth fee to the flashloan so we receive 0.01322 Eth. Let's just imagine if we repeat this action for about 10 times or even 100 time or more. You will be earning $ 100,000 worth of Etherium.
To perform this operation, we have to pay the gas fees because all the transactions on the Ethereum network require gas fee to execute this operation. That's where everything changes, sometimes there will be higher gas fees than what you profit, but most of the time it cost higher gas fees. So sounds like cheating, really?!
No! That's where we need to use our IQ to apply the attack on furucombo.
Instead of above combo- flash loan (0.1 ETH) > uniswap v2 (0.1 eth to 436.31848 bat) > balancer (436.31848 bat to 0.11331eth) > pay back flash loan (0.10009 eth) > profit (0.01322).
If we do an Attack combo - flash loan (1 ETH) > uniswap v2 (0.1 eth to 436.31848 bat) > balancer (436.31848 bat to 0.11331eth) >uniswap v2 (0.1 eth to 436.31848 bat) > balancer (436.31848 bat to 0.11331eth) >uniswap v2 (0.1 eth to 436.31848 bat) > balancer (436.31848 bat to 0.11331eth) > uniswap v2 (0.1 eth to 436.31848 bat) > balancer (436.31848 bat to 0.11331eth) >uniswap v2 (0.1 eth to 436.31848 bat) > balancer (436.31848 bat to 0.11331eth) >uniswap v2 (0.1 eth to 436.31848 bat) > balancer (436.31848 bat to 0.11331eth) >uniswap v2 (0.1 eth to 436.31848 bat) > balancer (436.31848 bat to 0.11331eth) >uniswap v2 (0.1 eth to 436.31848 bat) > balancer (436.31848 bat to 0.11331eth) >uniswap v2 (0.1 eth to 436.31848 bat) > balancer (436.31848 bat to 0.11331eth) >uniswap v2 (0.1 eth to 436.31848 bat) > balancer (436.31848 bat to 0.11331eth) >uniswap v2 (0.1 eth to 436.31848 bat) > balancer (436.31848 bat to 0.11331eth) >pay back flash loan (1. 0009 eth) > profit (0.1322).
So What I just did above is just repeated the uniswap v2 and balancer swap 10 times. So you profit 0.1322 than 0.01322 that is more than the gas fee. Means you got a job!! Just kidding. Crypto prices changes frequently, so all exchanges and money legos will change their prices too. But sometimes you get an arbitrage opportunities like the above, when you get, you can apply the attack combo and profit the situation.
Unfortunately, I didn't have enough ethereum to cover the gas fee, some of those gas fees are around 0.3 eth and gas limits are more than 250000. So, I'm leaving this to you guys, if you have enough Eth in your wallet to cover the gas fee, try and apply the above strategy on furucombo.
It's really easy to just put all this stuff together and click a button. And then it works. Otherwise, you have to develop your own smart contracts and things like that. And some way to trigger it in order to perform the flash loan as well. And don't worry if you can't find a profitable exchanges, you need to wait for an arbitrage opportunity to happen before performing a successful flash long arbitrage.
So when does that typically happen?
Well, when the price gets really volatile, so when you see like massive price movements and a really short amount of time, that's when arbitrage opportunities typically happen because the exchange prices fall out of sync. And then you can buy a low on one and sell high on another.
But if you are a developer have some coding knowledge, you came across dozens of different exchanges, and also hundreds of different cryptocurrencies, you can create nearly infinite number of combinations to do arbitrage and flash loans by coding all this yourself, because you can add support for any exchanges, or any different cryptocurrencies. If no, then don't worry furucombo is just for you guys.
Thank you so much for paying attention.
If you have any questions comment below and share your ideas to apply on furucombo.
Here, I'm raising 0.4 ETH to try out one these combo, which is not possible without your help. Just a small donation of Eth or BCH can help me accomplish task. Your donation will go towards the ETH gas fee that help me with the transaction successfully. You can donate any amount of ethereum or bitcoin cash to my address below and I will be updating you the amount of eth added up everytime I receive the donations from you. And include your name in the description so that I can thank you in the comments. Once I've raised 0.4 Eth, I'll be uploading another article telling you the feedbacks, amount I profit and more details through out the process.
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