Understanding flash loans and how to utilize them in a cross-chain market

How can Angular support flash loans?

How to utilize flash loans on Angular?

  • Arbitrage Trades: arbitrage is the strategy of making a profit from price differences for the same asset in different money markets. To make a substantial profit, end-users will need significant capital to get started — this is where flash loans come into the picture. For example, let’s say an end-user finds an arbitrage opportunity between DEX 1 and DEX 2 for Assets X and Y where 1 X = 0.9927 Y on DEX 2 and 0.8057 Y on DEX 1. Here is how the end-user should proceed:
  1. Borrow 100 X on Angular
  2. Swap 100 X for 122.83649 Y on DEX 1 via Angular
  3. Swap 122.83649 Y for 122.83429 X on DEX 2 via Angular
  4. Repay 100 X on Angular
  5. Keep 22.83429 X as profit
  • Collateral Swapping: collateral swapping refers to the quick swapping of the collateral backing an end-user’s loan for another type of collateral. Collateral swapping on Angular enables you to simply swap collateral to keep a trading position and add a passive “long” by holding another asset as collateral. If the new collateral asset outperforms the original one it leads to a higher profit. Let’s say an end-user has taken a loan of Asset X with Asset Y as collateral on Angular. Here is an example of how collateral swapping will work:
  1. Take a flash loan in Asset Y on Angular
  2. Swap for Asset Z on a DEX via Angular
  3. Deposit Z as collateral on Angular
  4. Withdraw Y (original collateral) from the respective collateral pool on Angular
  5. Repay the flash loan
  • Self-Liquidation: if an end-user has taken a loan on Angular and the price of the collateral asset drops quickly and nears the liquidation point, the end-user can take a flash loan and self-liquidate the loan. While the end-user will lose the collateral, he will avoid paying the penalty fee.
  • Self-Hedging: self-hedging is ideal for end-users who are willing to take risks in leveraging long. An end-user can decide to use Angular to wind down a Collateralized Debt Position (CDP). Here is how:
  1. An end-user can take a flash loan in Asset X on Angular
  2. Cover his old CDP in Asset Y with borrowed X
  3. Get Y back and enter a new CDP
  4. Withdraw some Y and convert it to X via Angular
  5. Repay the flash loan

Mitigating price oracle manipulation attack vectors

Conclusion

Follow us on our socials:

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Angular Finance

Angular Finance

A premier lending protocol, built on Kusama.