Ever wondered how those hackers make a fortune with flash loans. I will show you how to Create Flash loans in Polygon and Ethereum legally using a tool called Furucombo without the need for Coding Solidity.
AAVE provides flashloans. With Flashloans, no capital is needed to execute a liquidation, borrow funds from Aave, pay back the debt on behalf of the borrower, collect their deposit, trade it for the best available price on paraswap.io and return the assets to Aave with a small fee all in a single transaction. The remaining assets are yours to keep! It is even possible to use Flash Loans without coding skills through user interfaces as the one provided by furucombo.
Arbitrage In order to find Arbitrage opportunity, you can relies on Coinmarketcap for finding price mismatches between different exchanges. Please keep in mind that Furucombo does NOT find arbitrage opportunities for you. You will have to find it yourself. One of the most profitable flashloans pairs are WETH to APE. WETH to APE WETH more profitable. In this case I used Furucomb on Ethereum chain it has more number of tools available than the Polygon. In Ethereum there is support for Paraswap, Quickswap, Sushiswap, Curve, Uniswap v2, Uniswap V3, Yearn Finance, Compound, Maker, 1Inch, B Protocol, Synthetix, and obviously AAVE. I use Paraswap to Swap out WETH into APE token. Click previous output. Click Set. Drag and drop this above the AAVE payoff flash loan block. Next, I added 1Inch Swap of APE to WETH.
In the polygon chain is that there are less Furucombo blocks available. There is support for Paraswap, Quickswap, Sushiswap, Curve, Uniswap V3, and obviously AAVE.
Collateral Swap All DeFi lending protocols are now allowing multi-collateral deposits. In highly fluctuating markets, some assets might be more bullish than others, so why not simply swap collateral to keep a trading position and add a passive “long” by holding another asset as collateral? If the new asset used as a deposit overperforms the original one it leads to higher profits.
This Collateral swap on makerDAO can similarly executed on Compound or DyDx.
Self-Hedging for reckless traders A Borrower willing to take risks in leveraging long, just like the legendary CDP 3228, can decide to use Aave to hedge their risk by building a flash loan script to wind down a debt position All of this in a single and almost instant transaction!
Self Liquidation In the DeFi ecosystem, the liquidations penalties for loans are currently in a range of 3 to 15% depending on the platform, a pretty high price on multi-million $ positions. By leveraging Flashloans, services allowing self-liquidation can be built. If you have a position open and are not near the devices needed to access your funds, simple market events (that are not very rare in our highly fluctuating markets) can trigger a liquidation.
Debt refinancing — ‘Interest Rate Swap’ Aave Protocol and Flash Loans are used to refinance debt to a lower possible interest rate in another lending protocol. Flashloans can be used to. All of that in a single transaction.
Debt refinancing — ‘Currency Swap’ This can be extended to swapping the rate to another currency where the rate is even lower either temporary or for the whole loan period by adding an additional transaction for the Flash Loan circuit where the current borrow currency is sold to another one.
In conclusion, AAVE flash loan is supported by Polygon and Ethereum chains. For Fantom you can use Cream Finance as flash loan provider. Cream Finance provide flash loan support for For Binance Smart, Arbitrum, Polygon and of course Ethereum. Using Cream Flash Loans you interact with CToken contract, instead of the lending pool. Flash Loan fee is 0.03%. You can also use for Binance Smart Chain flash loan provider as Pancakeswap. For Avalaunch chains flash loan provider is V-Cred Avalaunch. When using flash loans, you need to worry about slippage for large orders. Make sure to pick trading pairs with very large liquidity so slippage is very low. Not all markets have flash loans. Biggest effort is used to finding good arbitrage trading pairs for flash loans. Even if they are there, they will not last that long because some other bot will exploit the price difference and arbitrage will be gone. There is also risk of arbitrage where your gas will be used when there is not much price difference to exploit by the arbitrage.
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Time Stamp: 00:00 Introduction to Furucombo on Ethereum and Polygon 01:16 Arbitrage on Furucombo 03:17 Collateral swap 04:21 Self-hedging 04:57 Self-liquidation 05:42 Debt Interest rate swap 06:13 Debt Currency swap 07:25 Risk of Flash Loans
