🟣 DeFi Day 85: Aave Flash Loan Arbitrage Let's see how traders use them for arbitrage. ⚡ How does it work? Imagine the same token has different prices on two DEXs. * 🏦 Step 1: Borrow USDC through an Aave flash loan. * 🔄 Step 2: Buy ETH on DEX A at a lower price. * 📈 Step 3: Sell ETH on DEX B at a higher price. * 💰 Step 4: Repay the flash loan and fee in the same transaction. * ✅ Step 5: Keep any remaining profit. Example: Buy ETH for $2,000 on DEX A and sell it for $2,020 on DEX B. The apparent difference is $20, but actual profit depends on trading fees, slippage, gas costs and the flash-loan fee. If the trade cannot repay the loan, the transaction reverts. Why does this matter? Flash loans let traders access temporary capital without holding the entire amount themselves. But arbitrage opportunities are competitive, and a profitable trade is never guaranteed. DeFi insight: In arbitrage, spotting a price difference is easy. Executing the trade profitably before the opportunity disappears is the real challenge. 🚀