Flash loans have quickly become the talk of the town. With the recent exploits on Fulcrum and the imminent potential to disrupt the governance of the chain, flash loans have gained a fairly noticeable reputation among the general public. Challenge community.
However, flash loans hold incredible potential for the common good. They democratize access by allowing any user to borrow as much capital available in a liquidity pool (without the need for collateral) to execute any kind of transaction. The only possibility is that the loan must be borrowed and repaid in the same transaction. If not, the transaction fails.
Flash loans are a whole new crypto-native financial product. Their use cases are largely unexplored, leaving developers with rich opportunities ahead.
With that, DeFi Saver – a platform giving users advanced control over Maker CDP Exposure and Debt (recently renamed Vault) – in partnership with Aave to release DeFi SAaver: 1-transaction vault closings using flash loans.
We are happy to present the CDP close in 1 transaction with flash loans! 🎉🎉
More info in our post below. https://t.co/IdC5TQie98
– DeFi Saver (@DeFiSaver) March 10, 2020
One-transaction vault closings (also known as self-liquidation) allow users to repay all of their debt with the collateral contained in the vault, thereby closing the debt position.
DeFi users can take advantage of this design as a stop-loss on their vault, to avoid having to continually unwind a debt position during a bear market, or a way to close the position and collect profit. during a bull run.
Traditionally, closing a safe with a flash loan can be quite a cumbersome process. Users are required to
- Initiate a Dai flash loan equal to the value of the safe
- Pay off Dai Vault debt using the Dai
- Remove the guarantee from the safe
- Convert collateral value to Dai for flash loan debt
- Dai flash loan debt repayment
- Withdraw the remaining collateral as a profit
Now DeFi Saver’s new flash lending feature consolidates all of these transactions into one transparent transaction for users. All you have to do is click a button and confirm the transaction on the DeFi Saver MakerDAO Dashboard.
In total, the process includes a DeFi Saver service fee of 0.25%, Aave flash loan fee of 0.09%, and Ethereum gas fees.
By leveraging flash loans, DeFi Saver offers users a new range of options for advanced Vault management. With the increasing amount of Dai and the continued volatility of the crypto markets, managing your vaults can be a rather stressful process.
Fortunately, DeFi Saver helps users to securely and efficiently ensure that safes always stay well secured while providing new options for capitalizing on a safe’s profit potential.
Key points to remember
The potential of flash loans to provide DeFi users with entirely new financial products, including Vault management, cannot be underestimated. While flash loans have gained a noticeable reputation in the DeFi community in recent months, the innovation possible with this new financial primitive is not widely understood.
DeFi Saver takes a step in the right direction by showing the power of flash loans. Users will now be able to access more advanced vault management features that were largely unavailable until now.
The past 24 hours have been very volatile, but all of Automation’s CDPs have been protected from liquidation.
There have been over 250 automated repayment transactions, with a total debt of $ 1.2 million being repaid.
– DeFi Saver (@DeFiSaver) March 9, 2020
In the years to come, use cases for flash loans will continue to be explored by the DeFi community (for good and bad). The main takeaway here is that flash loans can toughen up DeFi protocols while opening up a whole new field of opportunities for early adopters. Sophisticated arbitrage opportunities, enhanced vault management and much more are completely democratized by the introduction of flash loans.
Analyst at Without bank – one of the main resources for open finance. Lucas is an active contributor to the DeFi ecosystem with appearances in other notable DeFi outlets including The defiant and Our network. He has years of experience working with dozens of blockchain and token startups where he has focused on the economy, marketing, and growth of tokens.