Flash Loans

Uncollateralized borrow-and-repay within one transaction; flashLoan flow, callback, and implementation steps.

Flash loans let you borrow without collateral as long as you repay in the same transaction.

Flash loans in Bend

In Bend, flash loans:

• Require no collateral
• Must be repaid in the same transaction
• Execute in one block
• Are aimed at developers and advanced users

How they work

The Morpho contract exposes flashLoan and uses a callback to complete the flow.

Flow

1. Initiate: Your contract calls morpho.flashLoan(token, amount, data).
2. Receive: Morpho transfers the requested amount to your contract.
3. Callback: Morpho calls onMorphoFlashLoan(amount, data) on your contract.
4. Logic: Your contract runs its logic (arbitrage, swap, etc.).
5. Repay: Your contract approves Morpho to pull back the borrowed amount.
6. Complete: Morpho pulls the funds. If repayment fails, the whole transaction reverts.

Implementation

To use flash loans:

1. Implement a contract that conforms to IMorphoFlashLoanCallback.
2. Implement onMorphoFlashLoan with your logic.
3. In the callback, approve the Bend (Morpho) contract to pull the borrowed amount before returning.

Use cases

• Arbitrage: Profit from price differences across protocols in one transaction
• Collateral swap: Replace one collateral type with another in one transaction
• Self-liquidation: Liquidate your own position to avoid third-party liquidation
• Flash actions: Combine several Bend operations in one transaction

Security

• Atomicity: If the callback doesn’t approve repayment, the transaction reverts.
• Funds: Don’t leave funds in the flash loan contract after the callback.
• Reentrancy: Be careful calling external contracts inside the callback.
• Gas: Flash loan flows can use a lot of gas.

Bend callbacks

Bend supports additional callbacks for richer flows:

• IMorphoLiquidateCallback: Liquidations
• IMorphoRepayCallback: Repayments
• IMorphoSupplyCallback: Supply
• IMorphoSupplyCollateralCallback: Supply collateral

You can combine supply, borrow, repay, and withdraw in a single transaction using these callbacks.