What Goes Wrong When Launching a Flash Loan Arbitrage Bot—And How to Fix It

Thu, 24 Jul 2025 09:10:45 +0000

One such method that has gained significant attention is the flash loan arbitrage bot. These automated programs are designed to exploit price differences of a crypto asset across different exchanges. The bot borrows a large sum of cryptocurrency without collateral through a "flash loan," buys an asset at a lower price on one exchange, sells it at a higher price on another, repays the loan with a fee, and pockets the difference—all within a single blockchain transaction. If any part of this process fails, the entire transaction is reversed, making it a theoretically risk-free endeavor for the lender.