🐻⛓️ Berachain Bend Docs

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Flash Loans ​

Flash loans are a powerful DeFi primitive that allow users to borrow assets without collateral, as long as the borrowed amount is returned within the same transaction block.

What Are Flash Loans in Bend? ​

Bend's flash loans are similar to other DeFi protocols where these:

  • Allow borrowing without prior collateral
  • Require repayment within the same transaction
  • Execute in a single block
  • Are primarily meant for developers and advanced users

How Bend Flash Loans Work ​

The core flash loan functionality is implemented through the flashLoan function in the Morpho contract with a corresponding callback mechanism.

The Flash Loan Flow in Bend ​

  1. Initiation: A user contract calls morpho.flashLoan(token, amount, data)
  2. Asset Transfer: Bend (Morpho) transfers the requested token amount to the calling contract
  3. Callback Execution: Bend (Morpho) calls onMorphoFlashLoan(amount, data) on the caller contract
  4. Execution of Logic: The user's contract executes its intended operations
  5. Repayment: The user's contract must approve Bend (Morpho) to pull back the borrowed amount
  6. Completion: Bend (Morpho) pulls the funds back from the caller contract

If at any point the flow fails (especially if the repayment fails), the entire transaction reverts.

Implementing a Flash Loan in Bend ​

To use a flash loan with Bend, you need to:

  1. Create a contract that implements the IMorphoFlashLoanCallback interface
  2. Implement the onMorphoFlashLoan function that will handle your logic
  3. Ensure your callback function approves the Bend contract to pull back the borrowed amount

Flash Loan Use Cases with Bend ​

  1. Arbitrage: Execute trades across different protocols to profit from price discrepancies
  2. Collateral Swaps: Replace one collateral type with another in a single transaction
  3. Self-Liquidation: Liquidate your own position to avoid liquidation penalties
  4. Flash Actions: Combine multiple Bend operations in a single transaction

Security Considerations for Bend Flash Loans ​

  1. Transaction Atomicity: If your callback fails to approve the repayment, the entire transaction will revert
  2. Contract Security: Never leave funds in your flash loan contract permanently
  3. Reentrancy: Be careful about calling external contracts within your flash loan logic
  4. Gas Management: Flash loans are complex operations that consume significant gas

Bend-Specific Callbacks ​

Bend implements a broader callback system:

  • IMorphoLiquidateCallback: For liquidation operations
  • IMorphoRepayCallback: For repayment operations
  • IMorphoSupplyCallback: For supply operations
  • IMorphoSupplyCollateralCallback: For supplying collateral

This comprehensive callback system allows for more complex transaction patterns beyond simple flash loans, such as combining supply, borrow, repay, and withdraw operations in a single transaction flow.