Most loans exist because time passes between borrowing and repaying, and that gap is why a lender asks for collateral, a credit check, or both. Some on-chain tasks, such as clearing a risky loan or closing a price gap between two markets, need large amounts of capital for a moment, far shorter than any ordinary loan assumes.
A flash loan answers that need by taking time out of the loan altogether: the borrowed amount and a fee must come back before the same blockchain transaction ends, so the lender never carries open credit into the next block. Aave offers flash loans on reserves where borrowing is enabled, calls them One Block Borrows, and sets the fee at 0.05% when a market is deployed, a figure governance can change later (source: Aave Docs, Flash Loans).
What is an Aave flash loan?
An Aave flash loan is a loan of pool liquidity that starts and ends inside one transaction. A contract you control receives the tokens and uses them. Before the transaction finishes, the Pool must be able to pull back the amount plus the fee, or every step reverts together (source: Aave Docs, Flash Loans).
The sequence always runs in the same order, starting when your contract asks the Pool contract for an amount of one or more reserves. The Pool runs its checks, sends the tokens, and then calls your contract so the contract can do its work with them. That work can be a swap, the repayment of another loan, or a liquidation, as long as it fits inside the same transaction. At the end the Pool collects what it is owed, or the whole transaction fails.
| Step | What happens | What it means for you |
|---|---|---|
| Request | Your contract asks the Pool for an amount of a reserve | Funds move only after the Pool's checks pass |
| Use | The Pool sends the tokens and calls your contract, which runs its operations | The capital exists only inside this transaction |
| Repay | The Pool pulls back the amount plus the fee | The loan closes, or the whole transaction reverts |
An Ethereum transaction is a cryptographically signed instruction, sent from an account, that changes the state of the network once it is included in a block (source: ethereum.org, Transactions). Because a flash loan lives inside one such instruction, the network records either the whole sequence, loan and repayment together, or none of it. Developers call this property atomicity, and it is the reason a lender can hand out unsecured funds at all.
For you as a protocol user, the useful picture is timing, because the borrowed capital is real for the length of one transaction, which makes it powerful for a single sequence of on-chain steps and useless as money you hold until tomorrow. You never carry an open flash loan balance across blocks the way you carry an ordinary Aave debt, so there is nothing to monitor, refinance, or repay later.
Why same-transaction repayment replaces collateral
Collateral protects a lender against a borrower who stops paying while prices move. A flash loan removes that risk by removing time, because the Pool releases funds only inside a transaction that must end with repayment, which is why the borrower does not have to supply collateral before the loan starts (source: Aave Docs, Flash Loans).
An ordinary Aave loan works the other way round, because it stays open across many blocks. Suppliers deposit assets into a pool that borrowers draw from through overcollateralized positions. In return for that liquidity, suppliers earn interest under parameters that governance approves for each pool (source: Aave Docs, Liquidity Pool). The position can be liquidated once its health factor drops below 1, which is the threat that keeps an open loan solvent while collateral prices move.
| Feature | Ordinary Aave borrow | Flash loan |
|---|---|---|
| Collateral supplied first | Required | Not required when repaid in the same transaction |
| How long it lasts | Many blocks, often weeks or months | One transaction |
| What happens if it goes wrong | Liquidation when the health factor falls below 1 | The whole transaction reverts |
| Cost | Variable borrow interest while the loan is open | One fee on the amount borrowed |
The time scale explains the difference, since Ethereum divides time into twelve-second units called slots, with one validator chosen at random in each slot to propose a block (source: ethereum.org, Blocks). A flash loan must open and close inside a single transaction in one of those blocks, while an ordinary loan accrues interest across a long run of them and depends on its collateral the whole time.
Suppliers are protected by the same rule, because their deposits can leave the reserve only inside a transaction that brings them back with the fee. The collateral requirement disappears only because repayment is enforced by the transaction itself, and the one way to keep borrowed funds past that point is to turn them into ordinary debt backed by collateral.
flashLoan vs flashLoanSimple for a protocol user
Aave V3 offers two flash loan methods on its Pool contract. flashLoanSimple borrows from a single reserve and must be repaid with the fee. flashLoan can borrow from several reserves in one transaction and can end by opening variable-rate debt, secured by your supplied collateral or by credit delegation, in place of repayment (source: Aave Docs, Flash Loans).
| Question | flashLoanSimple | flashLoan |
|---|---|---|
| Reserves in one call | One | One or more |
| Can it end as open debt? | No, repayment is the only exit | Yes, when collateral or delegation backs the debt |
| Typical use | Single-asset arbitrage or liquidation | Multi-asset moves, or a loan that becomes a position |
The single-reserve method is also the cheaper one in gas for a simple flash loan of one asset (source: Aave Docs, Flash Loans). The multi-reserve method suits a sequence that needs two tokens at once, or one that is meant to finish as a loan you keep.
Credit delegation is the second way to back that debt: with Aave credit delegation, one account lets another borrow against its collateral, so a flash loan can end as debt on an address that approved the borrower in advance.
The debt-opening route shows what separates a flash loan from an ordinary borrow, so suppose you have ETH supplied as collateral and a contract flash-borrows 10,000 USDC through flashLoan with the debt option selected. The contract uses the USDC inside the transaction, and at the end your account carries 10,000 USDC of variable debt in place of a repayment. From the next block it behaves like any loan opened through the steps in how to borrow on Aave, with interest accruing and a health factor to watch.
You will rarely type either method name yourself, although the labels still help when you read what an interface did. A sequence that closed with nothing left on your account used repayment, while one that left new variable debt used the debt option of the multi-reserve method.
How apps and Aave features use flash loans
Flash loans already run inside live Aave V3 features and third-party tools, and Aave V3 itself uses them for its liquidity switch feature. The same mechanism supports arbitrage without holding the principal, along with liquidations that repay the flash loan from the discounted collateral they claim (source: Aave Docs, Flash Loans).
Calling the Pool directly is an advanced task built for developers who know how to program smart contracts on the Ethereum Virtual Machine (EVM) (source: Aave Docs, Flash Loans). Interfaces have opened the same feature to people who do not write code. Furucombo appears among the interfaces Aave lists for flash loans, supply, and withdrawal (source: Aave Help, Accessing Aave). Its combo builder chained DeFi actions into one transaction and let users run flash loans without writing a contract. The public Furucombo app has since been retired (source: Furucombo, Furucombo FAQ).
That pattern explains why some actions in an interface can move a large position in one signature. An interface can borrow from the pool, rearrange assets, and repay inside the transaction you approve, and the button may never use the words flash loan. The signature still covers a sequence that depends on temporary pool liquidity and a successful repayment at the end.
A liquidation shows the whole sequence end to end: suppose a borrower's health factor has fallen below 1, and you assume a 5% liquidation bonus on the collateral. Your contract flash-borrows 5,000 USDC, repays that much of the borrower's debt, and receives ETH collateral worth 5,250 USDC. It sells the ETH for 5,250 USDC and repays 5,000 USDC plus the 0.05% fee of 2.50 USDC. The contract keeps 247.50 USDC before gas and never needed the 5,000 USDC up front.
Atomic transactions make this possible across the wider Ethereum DeFi ecosystem, where one transaction can call several protocols in turn. Every step must settle on-chain before the transaction completes, so the borrowed funds cannot leave the chain to pay for anything off it.
Fee, revert, and what success looks like for the pool
A flash loan succeeds when the Pool can pull back the borrowed amount plus the fee before the transaction ends, or when an allowed debt opens in its place. If the amount owed is missing, whether from a short balance, a missing approval, or too little collateral for the debt, the whole transaction reverts (source: Aave Docs, Flash Loans).
The fee for each market is stored in the Pool as FLASHLOAN_PREMIUM_TOTAL, so read that value when you need exact economics. The fee was designed to be shared between suppliers and the Aave treasury, with the treasury's share set to zero at initialization (source: Aave Docs, Flash Loans). Since the Aave v3.4 upgrade, every flash loan fee goes to the treasury in the token that was borrowed. The protocol's share of the fee is now fixed at 100% (source: Aave DAO, v3.4 features).
| Amount borrowed | Fee at the 0.05% starting rate | Amount the Pool pulls back |
|---|---|---|
| 100,000 USDC | 50 USDC | 100,050 USDC |
| 1,000,000 USDC | 500 USDC | 1,000,500 USDC |
An arbitrage shows both outcomes, so suppose a token is cheaper on one decentralized exchange (DEX) than on another. Your contract flash-borrows 100,000 USDC, buys the token on the cheaper DEX, sells it on the other for 100,300 USDC, and repays 100,050 USDC, keeping 250 USDC before gas. Now suppose another trader closes the gap in an earlier transaction in the same block, so your sale returns only 99,900 USDC. The contract is 150 USDC short of the 100,050 USDC owed, the transaction reverts, and the pool is untouched.
The failed attempt still costs you money. Gas is the unit that measures the computational effort an operation takes on Ethereum, with its fee due whether the transaction succeeds or fails (source: ethereum.org, Gas and fees). Gas is a separate cost from the flash loan fee, and Ethereum gas fees rise when the network is busy, so a failed attempt during congestion costs more.
Flash loans are a tool for contracts, and trading the AAVE token is a separate decision. If what draws you to Aave is the price of AAVE, the governance token of the protocol these pools run on, BloFin offers another way to trade it. You can buy and sell the token on AAVE/USDT Spot or trade its price through the AAVEUSDT Perpetual, a perpetual futures contract.
On BloFin the cost of a trade is a maker or taker fee set by your fee tier, with no gas and no premium, so check the BloFin fee schedule before you size an AAVE order.
How flash loans sit beside ordinary Aave borrowing
Ordinary borrowing and flash loans draw on the same reserves, and they answer different needs. An ordinary loan is a position you hold over time, with collateral, interest, and a health factor, while a flash loan is temporary liquidity that exists only until its transaction ends.
Both come from the shared pool model at the center of how Aave works: suppliers deposit assets into a reserve, and borrowers draw on that same liquidity. A flash loan borrows from the reserve for one transaction, and an ordinary loan borrows from it for as long as the position stays open and healthy. The Aave protocol runs both on the same contracts, so the choice between them is a choice of time horizon.
The cost structure follows from that horizon, since the flash loan fee is a one-time charge on a single transaction while borrow interest keeps accruing for as long as a debt position stays open. A strategy that needs capital for one sequence of on-chain steps fits a flash loan, and a plan that needs capital for days fits an ordinary loan with collateral you are prepared to defend.
Keep the two pictures separate when you read an interface, and after a one-signature action, check your account for new variable debt. If none appears, the action used temporary liquidity and closed it in the same transaction, whereas new debt means the action ended in an ordinary loan and everything you know about collateral, interest, and liquidation applies from that block on.
Looking to trade AAVE tokens on BloFin? To get started, you'll need to first create a BloFin account, fund your account with cryptocurrency, then open the AAVE/USDT Spot trading page or the AAVEUSDT Perpetual page.
Frequently asked questions
Can you start an Aave flash loan from a normal wallet?
A normal wallet can send the transaction, although the borrowed funds always go to a contract. An externally owned account, the ordinary kind of address a wallet controls, can call flashLoan or flashLoanSimple on the Pool directly. Another contract can make the same call, or the receiving contract can call the Pool for itself. In every case the receiver must be a contract that implements the executeOperation function, because the Pool sends the funds, calls that function, and then pulls the repayment from the same contract (source: Aave Docs, Flash Loans).
Are Aave flash loan fees ever waived?
The fee is waived for approved flash borrowers on the multi-reserve flashLoan method, and that approval is a role managed by the ACLManager contract of the market. The single-reserve flashLoanSimple method never waives the fee, so an address on the approved list still pays it whenever it uses that method. Everyone else pays the fee on every flash loan repaid in the same transaction, so read the stored premium for that market before you size a large loan (source: Aave Docs, Flash Loans).
Can one flash loan be partly repaid and partly kept as debt?
Each borrowed asset on the flashLoan method can end in its own way. You can repay some assets immediately while others become open debt, chosen per asset by the mode passed with the call. The debt lands on the address named as onBehalfOf, and only if that address has already approved the caller to take on debt for it, which is how credit delegation fits into a flash loan. An asset repaid in the same transaction still owes the amount plus the fee (source: Aave Docs, Flash Loans).
Can you flash loan GHO on Aave?
GHO can be flash loaned like any other asset since the Aave v3.4 upgrade, so contracts that rely on flash loans no longer need to treat it as a special case. The upgrade made GHO on the Core market work like every other listed token, with its supply minted directly into the pool ahead of time. Custom tools such as the GHO Debt Swap contract became obsolete as a result. The separate GHO FlashMinter was left unchanged by the upgrade (source: Aave DAO, v3.4 features).
Should a flash loan receiver contract hold funds between loans?
Keep a receiver contract close to empty between loans, because funds left permanently on a contract built from the FlashLoanReceiverBase template can be exposed to a griefing attack, in which an attacker finds a way to use the stored funds. The Pool pulls the amount owed from the receiver at the end of the operation, after the contract has given the Pool an allowance for the amount plus the fee, so the receiver needs a balance only for the moment it repays (source: Aave Docs, Flash Loans).
Why can a flash loan fail when the receiver holds enough tokens?
A sufficient balance is only part of repayment: the receiver must also authorize the Pool to pull the borrowed amount and fee. Without that allowance, the transaction reverts even when the receiver holds enough of the borrowed asset. Tokens sitting in the wallet that submitted the transaction do not replace the receiver's repayment balance. Check the receiver's balance and its allowance to the correct Pool together when investigating a failed loan (source: Aave Docs, Flash Loans).
Researched and written by the BloFin Academy editorial team with AI-assisted drafting. Primary sources include Aave Docs on flash loans and liquidity pools, Aave Help on accessing Aave, the Aave v3.4 features document on GitHub, the Furucombo FAQ, and ethereum.org developer docs on transactions, blocks, and gas. All facts independently verified against cited documentation current as of October 2026.
This article is for informational and educational purposes only. It is not financial, investment, trading, or legal advice. Cryptocurrency can lose value. Borrowing on Aave can lead to liquidation if the health factor drops below 1. Spot AAVE/USDT buys the token. An AAVEUSDT Perpetual is a contract on the price. Do your own research. Consider your circumstances before using any protocol or trading any asset.