// GLOSSARY -- DEFI

What is Flash Swap?

1 min read Updated

A flash swap is a feature of DEX protocols (primarily Uniswap) that allows you to receive tokens from a liquidity pool before paying for them — as long as payment or return occurs within the same transaction.

WHY IT MATTERS

Flash swaps are related to flash loans but work through DEX pools. You withdraw tokens from a pool, use them however you want within the transaction, and either pay the equivalent value (in the other pool token) or return them. If you do neither, the transaction reverts.

Use cases include: arbitrage (take tokens from one pool, sell on another, pay the first pool from proceeds), liquidations (borrow the repayment asset, liquidate, use proceeds to repay), and one-step token migrations.

Flash swaps are gas-efficient compared to multi-step approaches because everything happens in a single transaction.

FREQUENTLY ASKED QUESTIONS

Flash swap vs flash loan?
Flash loans borrow from lending protocols. Flash swaps borrow from DEX liquidity pools. Mechanically similar — both require same-transaction repayment — but different sources and fee structures.
Do flash swaps cost anything?
Yes — the pool's swap fee (e.g., 0.3% on Uniswap V2) applies to the borrowed amount. This is typically lower than flash loan fees on lending protocols.
Can anyone execute flash swaps?
Anyone can call the swap function with the flash swap callback. You need a smart contract to handle the callback logic. No collateral or credit required.

FURTHER READING

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