Arbitrage and Flash Loans Explained - Crypto Basics

The phrase "buy low and sell high" typically applies to purchasing an asset and holding it across a period of time to sell at a later point when the asset appreciates. Thankfully, simply HODLing crypto isn't the only way to "buy low and sell high". Arbitrage is the process of buying an asset in one market and then instantly selling the same asset in a different market to profit from pricing inefficiencies across different exchanges. Although arbitrage has been around since the dawn of exchanging goods, the advent of blockchain technology has made this process more efficient and instantaneous through the application of smart contracts and "flash loans". In this post, we'll cover the basics of what arbitrage is and how it works, and then we will learn how flash loans offer additional features not present in traditional arbitrage. #defi #crypto #aave

References

https://www.investopedia.com/terms/a/arbitrage.asp

https://etherscan.io/gastracker

https://cointelegraph.com/explained/what-are-flash-loans-in-defi

https://medium.com/aave/sneak-peek-at-flash-loans-f2b28a394d62