Flash Loans

Flash Loans let you borrow an asset without posting collateral, provided the borrowed amount plus a fee is returned before the transaction ends. Because everything settles within a single transaction, you may see these referred to as "one-block borrows" There is no real-world equivalent for flash loans; they rely on how blockchain state is updated within a block. This is an advanced feature intended for developers who are comfortable with the EVM, Solidity, and smart contract patterns.

Overview

Flash loans allow access to pool liquidity (only for reserves where borrowing is enabled) for the duration of one transaction, as long as either:

• the borrowed amount + fee is returned by the end, or

• a debt position is opened by the end (if permitted).

Tydro exposes two methods:

flashLoan()

• Borrow from multiple reserves in a single transaction.

• At completion you may 1) repay amount + fee, or 2) open a variable-rate debt position backed by posted collateral or via credit delegation.

• Note: the flash loan fee can be waived for approved flashBorrowers (managed by ACLManager).

flashLoanSimple()

• Borrow from a single reserve for the transaction.

• The fee is not waived and no debt position can be opened at the end.

• Optimized for gas when you only need a basic, single-asset flash loan.

Execution Flow

Practical mental model for implementation:

1. Request: Your contract calls the Pool and requests a flash loan of specific amount(s) of one or more reserve(s) via flashLoanSimple() or flashLoan().

2. Transfer + Callback: After checks, the Pool transfers the requested amounts to your contract and then calls your receiver’s executeOperation().

3. Your Logic: With funds in hand, your contract runs arbitrary logic.

4. Settlement:

   • For flashLoanSimple(): before finishing, approve the Pool to pull back amount + fee.

   • For flashLoan(): for each reserve, depending on the interestRateMode you passed, either a) approve the Pool for amount + fee, or b) ensure sufficient collateral or credit delegation is in place to open a debt position.

5. Atomicity: If the owed amount is not available (insufficient balance, missing approval, or insufficient collateral for debt), the entire transaction reverts.

6. Block scope: Everything above happens within a single transaction (i.e., one block).

Applications of Flash Loans

Tydro Flash Loans are already used with Tydro for liquidity switch feature. Other examples in the wild (and supported with Tydro) include:

• Arbitrage: Arbitrage between assets, without needing to have the principal amount to execute the arbitrage.

• Liquidations: Liquidating borrow positions, without having to repay the debt of the positions and using discounted collateral claimed to payoff flashLoan amount + fee.

Flash loan fee

• The flash loan fee is initialized at 0.05%. The current value can be queried through FLASHLOAN_PREMIUM_TOTAL.

• The total fee paid by borrowers can be shared between LPs and the protocol treasury:

  • Fee to LPs: FLASHLOAN_PREMIUM_TOTAL - FLASHLOAN_PREMIUM_TO_PROTOCOL

  • Fee to Protocol: FLASHLOAN_PREMIUM_TO_PROTOCOL

• At initialization, FLASHLOAN_PREMIUM_TO_PROTOCOL = 0.

Step by step

1. Setting Up

• Your receiver must implement IFlashLoanSimpleReceiver or IFlashLoanReceiver, including the executeOperation() function.

• Because the Pool pulls repayment, your contract must approve the Pool to spend the borrowed amount + premium.

2. Calling flashLoan() or flashLoanSimple()

There are three ways to initiate:

• From an EOA: Send a transaction to the Pool calling flashLoan() or flashLoanSimple(). See the Pool docs for parameters, and use your receiver address from step 1 as receiverAddress.

• From a different contract: Same as above; ensure receiverAddress is your receiver from step 1.

• From the same contract: Call the method with receiverAddress = address(this).

Security note: Do not keep funds permanently on your receiver / FlashLoanReceiverBase. Idle funds can be griefed (e.g., siphoned during forced interactions).

3. Completing the flash loan

Immediate repayment

• If you used flashLoanSimple() or passed interestRateMode = 0 for any asset in the modes parameter of flashLoan(), you must repay immediately.

• Ensure your contract holds amount + premium for each relevant asset. You can compute this from the amountsand premiums arrays received in executeOperation().

• You do not manually transfer funds back; the Pool pulls repayment when your call returns.

Incurring a debt

• If you passed mode = 1 or mode = 2 for any asset in modes, the onBehalfOf address will incur the debt, provided it has previously approved the msg.sender to borrow on its behalf.

• You can mix behaviors: some assets repaid immediately, others converted into debt.

Notes

• Tydro does not offer a UI for flash loans. This is a developer-only feature available via smart contracts.