Flash Swap Development Guide

Flash swaps allow you to borrow tokens from a pool without upfront payment, execute arbitrary logic, and repay the loan (plus fees) in the same transaction.

Overview

Flash swaps enable powerful DeFi strategies:

• Arbitrage: Exploit price differences across exchanges
• Liquidations: Liquidate positions without holding collateral
• Collateral Swapping: Change collateral types atomically
• Capital Efficiency: Execute complex strategies without large capital

Flash Swap Mechanics

How Flash Swaps Work

1. Borrow: Request tokens from a pool with callback data
2. Execute: Perform arbitrary operations with borrowed tokens
3. Callback: Pool calls back to your contract
4. Repay: Return borrowed amount plus 0.3% fee
5. Validation: Pool verifies repayment and updates reserves

The Callback Pattern

When you initiate a flash swap with non-empty data, the pool will:

1. Transfer tokens to your contract
2. Call your contract's callback function
3. Verify that the loan has been repaid
4. Update pool reserves

Security Considerations

• Always verify the caller is a valid pool
• Ensure repayment logic cannot fail
• Consider reentrancy protection
• Test thoroughly with different scenarios
• Calculate gas costs carefully

Best Practices

• Check pool reserves before initiating flash swaps
• Account for fees in your calculations
• Implement proper error handling
• Monitor fuel costs for complex operations
• Start with small amounts when testing

Flash swaps are a powerful tool for building sophisticated DeFi strategies. Always test thoroughly and consider the security implications of your implementation.