Flash loans in Blockchain / Solidity - Practice Problems & Coding Challenges

Challenge - 5 Problems

❓ Predict Output

intermediate

What is the output of this Solidity flash loan example?

Consider this simplified Solidity code snippet for a flash loan. What will be the value of balanceAfter after the executeFlashLoan function runs successfully?

Blockchain / Solidity

contract FlashLoanExample {
    uint256 public balanceAfter;

    function executeFlashLoan(uint256 amount) external {
        uint256 balanceBefore = address(this).balance;
        // Simulate flash loan received
        uint256 loan = amount;
        // Use the loan for some operation (omitted)
        // Repay the loan
        balanceAfter = address(this).balance;
        require(balanceAfter >= balanceBefore, "Loan not repaid");
    }
}

A balanceAfter is less than balanceBefore, causing the require to fail and revert.

B balanceAfter is zero because the contract balance is reset after the function.

C balanceAfter is greater than balanceBefore, indicating profit from the loan.

D balanceAfter equals balanceBefore, meaning the loan was fully repaid.

💡 Hint

Think about what the require statement enforces about the contract's balance after the loan.

The require statement ensures the contract's balance after the flash loan operation is at least the same as before, meaning the loan must be fully repaid within the transaction. Therefore, balanceAfter equals balanceBefore.

🧠 Conceptual

intermediate

Why are flash loans considered risk-free for lenders?

Which of the following best explains why flash loans do not expose lenders to default risk?

A Because the lender holds the borrower's private keys during the loan.

B Because the loan is given only to trusted addresses with collateral.

C Because the loan must be repaid within the same transaction or the whole transaction reverts.

D Because the loan amount is always very small and insured by the protocol.

💡 Hint

Think about what happens if the borrower does not repay the loan in the same transaction.

Flash loans require the borrower to repay the loan within the same blockchain transaction. If repayment does not happen, the entire transaction is reverted, so the lender never loses funds.

🔧 Debug

advanced

Identify the error in this flash loan repayment code snippet

This Solidity function attempts to repay a flash loan but causes a runtime error. What is the cause?

Blockchain / Solidity

function repayLoan(uint256 amount) external {
    // Attempt to repay loan
    (bool success, ) = lender.call{value: amount}();
    require(success, "Repayment failed");
}

A The call is missing the function signature, so it sends plain Ether without calling repay function.

B The amount variable is not declared, causing a compilation error.

C The call should use transfer() instead of call() to send Ether.

D The require statement is incorrectly placed after the call.

💡 Hint

Consider how low-level call works when sending Ether and invoking functions.

Using call with only value sends Ether but does not specify which function to call on the lender contract. If the lender expects a function call to repay the loan, this will fail or not behave as intended.

📝 Syntax

advanced

Which option correctly defines a flash loan function in Solidity?

Select the option that correctly declares a flash loan function that takes a loan amount and a callback address.

A function flashLoan(uint256 amount, address callback) external { ... }

B function flashLoan(uint amount, address callback) public returns (bool) { ... }

C function flashLoan(uint256 amount, address callback) external payable { ... }

D function flashLoan(uint256 amount, address callback) external view { ... }

💡 Hint

Remember that flash loan functions usually modify state and do not return values.

The correct syntax uses uint256 for amount, external visibility, and no view modifier because the function changes state. It also does not return a value.

🚀 Application

expert

How many external calls are made in this flash loan transaction?

Given this sequence in a flash loan transaction: 1. Borrower requests loan from lender contract. 2. Lender contract calls borrower's executeOperation function. 3. Borrower performs arbitrage and repays lender. How many external contract calls occur during this transaction?

A 4

B 2

C 3

D 1

💡 Hint

Count calls between different contracts, including lender to borrower and borrower to lender.

There are two external calls: lender calls borrower (executeOperation), and borrower calls lender to repay. The initial request is a transaction from an EOA, not a contract call.