--- ### Why Flash Loans? The easiest way to understand flash loans may be through an understanding of one of their most common use cases - arbitration. **_What is Arbitrage?_** Let's consider a typical scenario. Suppose there are two DEXs, A and B. On Dex A, the exchange rate for Ethereum stands at $5, and on Dex B, Ethereum is trading at $6. Savvy investors might be quick to see an opportunity for profit. You could buy one Ethereum at DEX A for $5, then head over to DEX B and sell that Ethereum for $6. This simple transaction would net you a profit of $1. This process is known as **Arbitrage.** ::image{src='/security-section-6/4-what-is-a-flash-loan/what-is-a-flash-loan1.png' style='width: 100%; height: auto;'} Imagine if this situation were to scale up, and you were able to buy 10, 100 or 1000 ETH. The problem lies in the average person's ability to shoulder the upfront investment. In contemporary finance, opportunities like I've outlined above could only maximally be taken advantage of by `whales` aka the incredibly wealthy. This is where flash loans come in to level the playing field in DeFi by giving any user access to much more liquidity - for a single transaction. Let's look at how this works and what a flash loan itself is, in the next lesson. See you there!