How someone earned $16000 profit using a flash loan without investing anything?

I was surprised today after reading an article posted on cryptopotato.com in which they explained how someone made $16000 profit using a flash loan without any investment. However, they had to pay some gas fees for the whole transaction.

First time I came to know about DeFi protocol that provides a flash loan for which you don’t have to post any collaterals. But there is a condition that you have to repay the whole fund in a single transaction. While a traditional cryptocurrency loan needs collaterals in the form of crypto. This technique is completely new for me. I have seen the block which records all the transactions that show how the user made exactly $16182 in the same block and also he repaid the whole loan amount. The transaction may have been completed in a few seconds.

I have read few articles and watched some videos to understand how to make profit using a flash loan in a single transaction. But I am still not able to understand that how it works. Even I don’t know if a user couldn’t pay the borrowed money in a single transaction, then what will happen? However I have read in the sourced article

“If this criterion isn’t met, the contract will be void and as if it never existed.”

The whole process looks a littile bit tricky. You must be expert to participate in this game. I will have to read several articles and watched videos to have deep knowledge about the use of a flash loan and know how someone can make profit by buying and selling assets using arbitrage.

How one user made $16182 profit within seconds with no investment

You can see the block 10566089 to know what the user did to make huge profit. I have already seen it and understood a simple thing that the user borrow USDC token from dYdX and then swapped the whole amount for DAI on Curve y pool. After this transaction, he again swapped the whole DAI token for USDC on Curve’s SUSD pool. And repaid the borrowed USDC to dYdX. The whole process was completed in a single transaction. Read what the user did :

First, he borrowed 2,048,000 USDCT using dYdX’s flash loan. Remember, because it’s a flash loan, he doesn’t have to post any collateral as long as he repays the amount within the same block.

He then swapped this amount for 2,028,367 DAI on Curve y pool. After that, he swapped the DAI for 2,064,182 USDC on Curve’s SUSD pool, and lastly, he paid back the 2,048,000 USDC to dYdX, all within the same block.

The process looks simple. But you must be expert in this field if you want to use this technique to make profit.

Posted Using LeoFinance