The decentralized finance (defi) realm continues to heat up with concepts like yield farming, but another scheme called defi flash loans has also grown exponential. On Monday, the noncustodial lending protocol Aave issued $138 million in loans with zero collateral.
Since the last week of June, defi flash loans have increased by 809% as the protocol Aave is issuing anywhere between $80-100 million in flash loans per day. Data shows that Aave issued over $138 million on Monday and the pace continues to trend higher.
The word “Aave” is a Finnish term to describe a ghost, as the noncustodial platform allows for lending interest rates to be guided by algorithms directed by the supply and demand. Flash loans are used for significant arbitrage opportunities and they allow people to obtain handsome loans without collateral.