Are Flash Loans Good or Bad For Crypto?

Flash Loans are enabling ordinary cryptocurrency enthusiasts to walk away with hundreds of millions of dollars in profits made in minutes by exploiting weaknesses in DeFi contracts and systems. That is a known fact for several years now. But is it, in the end, good for DeFi for this to happen?

Depending on what side of the fence you sit, they can either look like criminals stealing the funds, or like white hat security researchers pointing out DeFi bugs. After all, the use of flash loans to exploit contract weaknesses is not hacking in the traditional sense. No computers are compromised; nobody loses their data or is forced to pay a ransom. The software code simply allows people to walk away with millions of dollars. Because the code was designed that way.

Of course, just because a contract is coded to allow something, doesn’t mean that was intentional. It is usually a result of doing something that was unexpected by the programmer of the contract, or having access to resources (like flash loans) that were not thought of when the contract was coded. But does that make it right?

Let us know your thoughts in the comments below.

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