> For the complete documentation index, see [llms.txt](https://docs.hyperlend.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.hyperlend.finance/developer-documentation/core-pools/flash-loans.md).

# ↪ flash-loans

## Flash Loans

Flash Loans are unique transactions that allow users to borrow assets without upfront collateral, provided that the borrowed amount plus a fee is returned within the same transaction (also known as "one-block borrows"). Since there is no real-world equivalent, understanding how blockchain state transitions occur within blocks is essential.

***Note:** Flash Loans are an advanced feature intended for developers. A solid grasp of the Ethereum Virtual Machine (EVM), programming, and smart contract development is necessary to utilize this functionality.*

***

### Overview

Flash Loans enable users to access the pool's liquidity for a single transaction, on the condition that the borrowed amount plus a fee is returned or a debt position is opened (if permitted) by the end of the transaction. This feature is applicable only to reserves where borrowing is enabled.

HyperLend offers two methods for flash loans:

1. **`flashLoan()`**\
   Allows borrowers to access liquidity from multiple reserves within a single flash loan transaction. Borrowers also have the option to open a variable-rate borrowing position backed by supplied collateral or via credit delegation.

   *Note:* The flash loan fee is waived for approved flash borrowers managed by the `ACLManager`.
2. **`flashLoanSimple()`**\
   Enables borrowers to access liquidity from a single reserve in a transaction. In this case, the flash loan fee is not waived, and borrowers cannot open any debt positions at the end of the transaction. This method is more gas-efficient for those seeking a straightforward flash loan with a single asset.

***

### Execution Flow

For developers, here's a conceptual framework to assist in building your solution:

1. **Initiate the Flash Loan**\
   Your contract calls the `Pool` contract, requesting a flash loan of specific amounts of reserves using either `flashLoanSimple()` or `flashLoan()`.
2. **Funds Transfer and Callback**\
   After performing necessary checks, the `Pool` transfers the requested amounts to your contract and then calls `executeOperation()` on your contract.
3. **Execute Custom Logic**\
   With the flash-loaned funds now in your contract, you can perform any arbitrary operations within your code.
4. **Repayment or Debt Opening**
   * **For `flashLoanSimple()`:** After your operations, you must approve the `Pool` to pull the flash-loaned amount plus the fee.
   * **For `flashLoan()`:** Depending on the `interestRateMode` for each asset, you must either approve the `Pool` for the amount plus fee or ensure sufficient collateral or credit delegation is available to open a debt position.
5. **Transaction Completion**\
   If the owed amount is not available due to insufficient balance, lack of approval, or inadequate collateral for debt, the transaction will revert.

**All these steps occur within a single transaction, meaning they happen within one Ethereum block.**

***

### Applications of Flash Loans

Flash Loans have various practical applications, including:

* **Arbitrage Opportunities**\
  Execute arbitrage between assets without needing the principal amount upfront.
* **Liquidation of Positions**\
  Liquidate borrowing positions without repaying the debt upfront by using the discounted collateral obtained to repay the flash loan amount plus the fee.

***

### Flash Loan Fee

The flash loan fee is initially set to **0.04%** at deployment and can be adjusted via a governance vote. Use `FLASHLOAN_PREMIUM_TOTAL` to retrieve the current value.

The fee is shared between liquidity providers (LPs) and the protocol treasury:

* **Fee to LPs:**\
  `FLASHLOAN_PREMIUM_TOTAL` minus `FLASHLOAN_PREMIUM_TO_PROTOCOL`
* **Fee to Protocol Treasury:**\
  `FLASHLOAN_PREMIUM_TO_PROTOCOL`

*Initially, `FLASHLOAN_PREMIUM_TO_PROTOCOL` is set to 0.*

***

### Step-by-Step Guide

#### 1. Setting Up

* **Implement the Receiver Interface**\
  Your contract that will receive the flash-loaned funds must implement the `IFlashLoanSimpleReceiver` or `IFlashLoanReceiver` interface by defining the appropriate `executeOperation()` function.
* **Grant Allowance**\
  Since the owed amounts will be pulled from your contract, you must grant the `Pool` contract an allowance to transfer the funds needed to repay the flash loan amount plus premiums.

#### 2. Invoking `flashLoan()` or `flashLoanSimple()`

There are three ways to call the flash loan methods:

* **From an Externally Owned Account (EOA):**\
  Send a transaction to the `Pool` contract calling `flashLoan()` or `flashLoanSimple()`. Refer to the `Pool`documentation for parameter details, ensuring you use your contract address from step 1 as the `receiverAddress`.
* **From a Different Contract:**\
  Similar to the EOA method but initiated from another contract. Ensure the `receiverAddress` is your contract address from step 1.
* **From the Same Contract:**\
  If you're using the same contract as in step 1, use `address(this)` for the `receiverAddress` parameter.

**Security Tip:** Never store funds permanently on your flash loan receiver contract, as they could be vulnerable to 'griefing' attacks where an attacker exploits the stored funds.

#### Completing the Flash Loan

* **Repayment:**\
  After executing your custom logic in `executeOperation()`, you need to repay the flash-loaned amounts if you used `flashLoanSimple()` or set `interestRateModes = 0` in `flashLoan()`.
* **Calculating the Amount Owed:**\
  Ensure your contract holds the required amount plus the premium. This can be calculated by summing the relevant entries in the `amounts` and `premiums` arrays provided in `executeOperation()`.
* **Automatic Pull of Funds:**\
  You don't need to manually transfer the owed amount back to the `Pool`; the funds will be automatically pulled at the end of your operation.

#### Incurring a Debt (Deferred Repayment)

If you used `mode=1` or `mode=2` for any assets in the `modes` parameter, the `onBehalfOf` address will incur the debt, provided that it has authorized the `msg.sender` to incur debts on its behalf.

This allows for a mix of assets—some can be repaid immediately, while others result in an open debt position.

***